Edited by Andrew W. Mullineux and Victor Murinde
Chapter 5: Competitive Banking in the EU and Euroland
Edward P.M. Gardener, Philip Molyneux and Jonathan Williams 1 INTRODUCTION A burgeoning literature and much speculation have already emerged on the impact of European Monetary Union (EMU) on European banking. In this respect at least EMU follows its predecessor, the Single Market Programme (SMP). Banking in Euroland is now involved in a major and far-reaching process of structural and strategic change. The rise of Euroland is not the only important strategic driver of major changes in European Union (EU) banking, but it is certainly one of the most signiﬁcant together with the impact of new technology and the heightening competitive environment. This chapter focuses on the rise of Euroland as a major integrating economic event. The chapter is organized as follows. After reviewing broad structure and performance trends in European banking (Section 2), the new strategic environment for banking is explored (Section 3). An examination is then undertaken of the impact of EU regulatory changes such as the SMP and EMU (Section 4); the speciﬁc impact of EMU on bank strategies is then considered (Section 5). Section 6 considers the kinds of competitive strategies that banks might pursue in Euroland and the general relevance of recent US experiences with bank consolidation. Section 7 concludes. 2 STRUCTURE AND PERFORMANCE TRENDS IN EU BANKING1 Increasing competition in ﬁnancial services has had the result of reducing the number of banks operating in many countries and this trend is common to virtually all European banking markets. It is also apparent across di...
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