Financial Crisis and the Changing Structure of Banking Firms and Industry: A Cross-Country Analysis

Abstract

The research points out that the role of traditional bank is in decline. Banks are losing their predominant role as deposit takers and lenders to firms. These changes have deep effects on the operation of banking firms, the structure and organization of banking firms, the structure of banking industry, the financial stability of banking firms and banking industry, and sustainability of new banking business models. Three level of analysis are affected: product/service level, firm level, and industry level.

Different drivers are increasingly putting the basic assumptions of integrated banking business models under pressure. The most notable trend in recent years is the adoption of an originate-to-distribute model. It transforms the traditional banking business, the structure of the industry, the competitive dynamics of the banking industry, and the type and range of firms conducting banking business. It also affects the definition of the “bank”, arising questions like what precisely a bank is, what the nature of a bank is, and what functions are really performed by a bank in an economic system.

Keywords: Banking Firm, Banking Industry, Business Model, Financial Intermediation, Financial Crisis

JEL Classification: G01, G20, G21, G23, G28