European banking. Efficiency, technology and growth

Author (Person)
Publication Date 2001
ISBN 0-471-49449-6
Content Type

Book abstract:

Structural de-regulation and conduct regulation has allowed banks to compete in previously inaccessible domestic and foreign markets. This has led to greater homogeneity of products and services and increased competition. An effect of this has been a trend of mergers and acquisitions to improve efficiency as well as strategies of diversification and financial innovation. This book aims to examine the determinants of concentration in banking and the relationship between size and growth of banks.

The book is divided into eight chapters in addition to the introduction. Current Developments in European Banking describes recent trends, such as those in the number of branches, the changes in average interest margins and the trends in cost, profitability and efficiency. Specific aspects of structural change are discussed including the impact of the European Monetary Union (EMU). Chapter 3, The Economics of Industry Structure, examines economic theory in the field of industrial organisation that is relevant to the banking sector followed by Chapter 4, Market Structure and the Growth and Performance of Banks, which provides a review of economic analyses of the banking sector. Chapter 5, Efficiency in European Banking, examines research into efficiency issues in the banking sector including analysis of the evidence on the sources of economies of scale and scope and the presence of x-efficiencies in banking. Chapter 7 examines the impact of technological change in the sector followed by a section reviewing previous empirical literature on the firm size-growth relationship in manufacturing and banking. Chapter 8 uses simulation methods to investigate the properties of a stochastic growth model of the evolution over time of the size distribution of a group of banks. Finally, Chapter 9 provides some empirical results of a test of the law of proportionate effect using data on seven European banking sectors.

The authors are from academic backgrounds specialising in banking, economics and industrial organisation.

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