European banking: An overview

• Published in: Journal of banking & finance Vol. 31; no. 7; pp. 1911 - 1935
• Main Authors: Goddard, John, Molyneux, Philip, Wilson, John O.S., Tavakoli, Manouche
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier B.V 01-07-2007; Elsevier; Elsevier Sequoia S.A
• Series: Journal of Banking & Finance
• Subjects: Banking; Capital market; Competition; Competition between banks; Consolidation; Credit; Efficiency; Europe; European integration; Integration; Monetary economics; Monetary policy; Monetary policy transmission; Product differentiation; Relationship banking; Retail banking; Structural change; Studies; Europe; Competition; Consolidation; Relationship banking; Efficiency; Monetary policy transmission; G21; Banking; European integration; L11
• ISSN: 0378-4266; 1872-6372
• DOI: 10.1016/j.jbankfin.2007.01.002

Against a background of far-reaching structural change in the banking sector, this article reviews the recent academic literature on developments in European banking. European banking markets have become increasingly integrated in recent years, but barriers to full integration, especially in retail banking, still remain. European integration has possible implications for systemic risk, and poses various challenges for the current supervisory framework. The banks’ responses to the changing competitive environment include the pursuit of strategies of diversification, vertical product differentiation and consolidation. European integration has implications for competition in banking markets, for the nature of long-term borrower-lender relationships, and for the relationships between ownership structure, technological change and bank efficiency. The article concludes by reviewing recent literature on the credit channel in the monetary transmission mechanism, and interest rate pass-through.