Limits to International Banking Consolidation


Grüner, Hans Peter ; Fecht, Falko



Document Type: Article
Year of publication: 2008
The title of a journal, publication series: Open Economies Review
Volume: 19
Issue number: 5
Page range: 651-666
Place of publication: Dordrecht [u.a.]
Publishing house: Springer Science + Business Media
ISSN: 0923-7992
Publication language: English
Institution: School of Law and Economics > VWL, Wirtschaftspolitik (Grüner)
Subject: 330 Economics
Classification: JEL: D61, E44, G21,
Abstract: Heterogenous banking supervision and regulation is often considered as the most important impediment for Pan-European Bank mergers. In this paper we identify other more fundamental reasons for a limited degree of cross-country integration in retail banking. We argue that the distribution of regional liquidity shocks may pose a natural limit to the extent of cross-border bank mergers. The paper derives the impact of different underlying stochastic structures on the optimal structure of cross regional bank mergers. Imposing a symmetry restriction on the underlying stochastic structure of liquidity shocks we find that benefits from diversification and the costs of contagion may be optimally traded off if banks from some but not from all regions merge. Under an additional monotonicity assumption full integration is only desirable if the number of regions with diverse risks is sufficiently large.

Dieser Eintrag ist Teil der Universitätsbibliographie.




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Grüner, Hans Peter ; Fecht, Falko (2008) Limits to International Banking Consolidation. Open Economies Review Dordrecht [u.a.] 19 5 651-666 [Article]


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