scholarly journals Ranking of EU national banking systems using multi-criteria analysis in the light of Brexit

2017 ◽  
Vol 67 (4) ◽  
pp. 473-509 ◽  
Author(s):  
Magdalena Radulescu ◽  
Aleksandra Fedajev ◽  
Djordje Nikolic
Keyword(s):  
System Analysis ◽  
Banking System ◽  
Entropy Method ◽  
Banking Union ◽  
Policy Makers ◽  
Promethee Ii ◽  
Banking Systems ◽  
Eu Member States ◽  
European Banking ◽  
Multi Criteria Analysis

In order to define and implement the most effective measures to overcome the difficulties of the post-crisis period, the policy-makers of ECB must identify not just main weaknesses of each banking system, but their strong points also. This requires the application of multi-criteria analysis, considering that policy-makers need to take into account a number of different aspects that, on the whole, indicate the quality of the banking system. Our aim is a comparative analysis of European banking systems right after the Brexit moment and within the framework of the tight new Basel III regulations. In this paper, we have ranked the banking systems of the 28 EU member states using multi-criteria analysis, specifically the PROMETHEE II method. The use of the PROMETHEE II method in combination with the entropy method offers a comprehensive insight into the banking system of each member state, given that the observed countries are ranked according to 9 conflicting criteria that are mostly used in banking system analysis. Our analysis shows that the banking systems in Central and Eastern Europe are the best performers, while the EMU’s developed banking systems such as the German, Italian, British, and French one are positioned among the last ranked. The Portuguese and Greek banking systems are, as expected, ranked in the last positions in our list. The obtained results also pointed out that the ECB should change its approach to the management and further development of a European Banking Union.

Justice system and corruption dog Bulgaria’s euro bid

2019 ◽  
Keyword(s):  
Banking System ◽  
Political Support ◽  
Banking Union ◽  
Waiting Room ◽  
Content Type ◽  
Eu Member States ◽  
European Banking Union ◽  
Finance Minister ◽  
European Banking ◽  
The Stability

Significance Bulgaria must also join the European Banking Union (EBU) as part of its Exchange Rate Mechanism (ERM) II bid, in order to alleviate concerns over institutional governance, economic convergence and the stability of its banking system. ERM II accession -- the ‘waiting room to the euro’ -- would bolster Bulgaria’s financial and monetary stability, and help serve as a policy anchor; Bulgaria had hoped to join this month, but Finance Minister Vladislav Goranov said in June he now hoped for entry by year-end if not before. Impacts Timing will depend on Bulgaria’s meeting the new requirement to join both ERM II and the EBU at the same time. Political support from other euro-area states could also affect the ultimate timeline. That Croatia has just applied for ERM II shows adopting the euro is still a goal, particularly for smaller EU member states.

scholarly journals The Asymmetric Implementation of the European Banking Union (EBU): Consequences for Financial Stability

2016 ◽  
Vol 50 (1) ◽  
pp. 7-26 ◽  
Author(s):  
Uwe Vollmer
Keyword(s):  
Financial Stability ◽  
Voting Rights ◽  
Banking Union ◽  
Member States ◽  
Bank Supervision ◽  
Eu Member States ◽  
European Banking Union ◽  
European Banking ◽  
Close Cooperation ◽  
European Stability Mechanism

Abstract EU Member States outside the Eurozone are hesitating to enter the European Banking Union (EBU) and to establish “close cooperation” in bank supervision with the ECB. This paper analyzes the consequences of such asymmetric integration for financial stability in Europe. It argues that the main obstacles against establishing close cooperation are a lack of voting rights and insufficient access to the fiscal backstop provided by the European Stability Mechanism (ESM). The paper presents arguments as to why international cooperation in bank supervision could be welfare improving, if multinational banks are dominant. It also discusses suitable reform options for making it more attractive for EU Member States to begin a close cooperation with the ECB.

scholarly journals The missing European Deposit Insurance Scheme

2020 ◽  
pp. 151
Author(s):  
Pery Bazoti
Keyword(s):  
Euro Area ◽  
Deposit Insurance ◽  
Banking System ◽  
Banking Union ◽  
The European Union ◽  
Risk Minimization ◽  
Insurance Scheme ◽  
European Banking Union ◽  
European Banking

The European Banking Union embarked as a highly ambitious project of the European Union as a response to the signifi cant fl aws and weaknesses in the original architecture of the European Monetary Union that became apparent during the economic crisis. However, the establishment of a single European banking system has stumbled upon the creation of a common deposit insurance scheme that could safeguard depositors and create a more stable fi nancial framework in the euro area. The European Deposit Insurance Scheme (EDIS) was fi rstly introduced by the European Commission in 2015. As a bold proposal that comprises wide risk mutualization among the euro area member states, it has spurred a vivid discussion in the European public speech and many proposals have been made since then altering its original planning in an effort to tackle the moral hazard concerns that have risen. The present article, after discussing the reasons that keep obstructing EDIS, presents these suggestions that move around, primarily, the role of the national deposit guarantee schemes. However, as highlighted in the article, before moving to any alterations on the structure and role of a proposed common deposit insurance scheme, signifi cant risk minimization on behalf of the national banking systems, must precede by limiting the sovereign exposures of banks and the size of the Non-Performing Loans. Such steps of risk minimization are critical for addressing concerns and the political unwillingness demonstrated by several European countries in moving forward towards deeper integration.

scholarly journals The impact of the European Banking Union’s Single Supervisory Mechanism on corporate governance practices in European banks

2018 ◽  
Vol 13 (2) ◽  
pp. 164-177 ◽  
Author(s):  
Udo Braendle
Keyword(s):  
Corporate Governance ◽  
Banking System ◽  
Banking Union ◽  
Single Supervisory Mechanism ◽  
European Banking Union ◽  
Regulatory Changes ◽  
Governance Practices ◽  
European Banking ◽  
European Banks ◽  
The Impact

Weak corporate governance in financial institutions has been a contributing factor of the financial crisis. The topic has, therefore, become the key priorities of banking supervision, because one of the takeaways was that. The article gives an overview about the newly established European Banking Union and about its structure focusing on the first pillar, the Single Supervisory Mechanism (SSM). In a second step, the focus is laid on the recent regulatory changes regarding corporate governance, the related supervisory practice and implications for European banks. Overall, the conducted changes in the regulatory framework, especially regarding corporate governance, seem to meet the objective of ensuring safety and soundness of the European banking system. Room for improvement is found regarding proportionality and transparency of the supervisory practices as well as its influence on banks’ profitability.

scholarly journals European Banking Union – an institutional analysis

2020 ◽  
Vol 5 (1) ◽  
pp. 59-75
Author(s):  
Barbara Majewska-Jurczyk
Keyword(s):  
Central Bank ◽  
Interest Rates ◽  
European Central Bank ◽  
Deposit Insurance ◽  
Banking System ◽  
Banking Union ◽  
Insurance Scheme ◽  
European Central ◽  
European Banking ◽  
The Creation

Aim: The Banking Union is an important step towards a genuine Economic and Monetary Union. The strengthening of the European banking system has become a topic of debate since the 2008 crisis when it became clear that stability and security of the system security may require increased supervision over operations conducted. The Banking Union was created to avoid the situation that taxpayers are first in line to pay for bailing out ailing banks. The Banking Union consists of three pillars: 1) the Single Supervisory Mechanism (SSM), which centralizes supervision of European banks around the European Central Bank, 2) the Single Resolution Mechanism (SRM), which the main purpose is to ensure the efficient resolution for recapitalization failing banks, and 3) the European Deposit Insurance Scheme (EDIS), which is still unfinished. The creation of the Banking Union is accompanied by a remarkable transfer of sovereignty to the European level. This article aims to provide an overview of the changes unfolding across the Banking Union from a law and economics perspective and to explain the role of the European Central Bank in supervision over the banking system, which is different from the policy of controlling prices through determining the level of interest rates and keeping inflation under control.   Design/Research methods: The analysis of the functioning Banking Union is based on the review of literature and analysis of reports and legal acts.   Findings: The Banking Union supports financial integration in the EU by implementing a common set of rules and a common supervisory and resolution mechanism. The creation of the Deposit Insurance Scheme is likely to contribute to the protection of banks and consumers in case of a potential future crisis. The author argues that the European Central Bank as a supervisor of the financial market should create a second supervisory body, which would significantly strengthen the system and allow the ECB more efficiently fulfill its task as chief supervisor.

scholarly journals The Economic Crisis of 2008 and the Financial System Supervision: Towards an European Banking Union

2018 ◽  
Vol 24 (2) ◽  
pp. 45-56
Author(s):  
Evaggelia Kolovou ◽  
Grigorios Gikas ◽  
Kostantinos Kyritsis
Keyword(s):  
Banking System ◽  
Capital Requirements ◽  
Regulatory Framework ◽  
Banking Union ◽  
International Banking ◽  
Risk Capital ◽  
Prudential Supervision ◽  
European Banking Union ◽  
European Banking ◽  
The Impact

The significant repercussions of the recent crisis in the financial sector and the real economy have led to the development of policies aimed at strengthening the stability of the international banking system. Banking regulatory reforms (Basel III) improve micro-prudential supervision and involve macro-prudential supervision to avoid systemic risk. Capital requirements are tightening up and the quality of core capital is upgraded in order to provide greater coverage of losses and better risk management. In addition, a new framework for liquidity risk is introduced, as well as a complementary tool for limiting leverage. Recently, an agreement was reached in the EU to establish a Banking Union in the Eurozone, based on uniform regulation, supervision, bank clearing and deposit protection mechanisms. This framework includes a common banking capital for bank consolidation, which aims to reduce the impact on savers. This study aims to analyse the banking sector's activities and the constituent elements of the existing regulatory framework, particularly those involved in the causes of the financial crisis. It also aims to present the dimensions of the new regulatory framework for joint supervision leading to the European Banking Union and to analyse the pillars that form it, even though they are still in progress. The analysis will also build on the experiences from the recent crisis, in order to reach clear conclusions about the necessity and role of the Banking Union.

When Measuring the Same Leads to Different Conclusions – A Critical Review of Measures Applied to Assess the Degree of Competition in Banking Systems

2020 ◽  
Vol 53 (1) ◽  
pp. 43-80
Author(s):  
Toni Richter ◽  
Holger Müller ◽  
Horst Gischer
Keyword(s):  
Critical Review ◽  
Banking System ◽  
Jel Classification ◽  
Competition Intensity ◽  
Banking Systems ◽  
Lerner Index ◽  
European Banking ◽  
Index 2 ◽  
Oriented Approach ◽  
Economic Studies

Abstract Economic studies on the degree of competition (DC) in banking systems use various measures which are subsumed under the 1) structure- (e.g. Herfin­dahl-Hirschman index), 2) conduct- (e.g. Boone indicator) or 3) performance-oriented approach (e.g. Lerner index). Yet, the respective empirical operationali­zations of the different DC measures are expected to represent one central construct – the true DC of a banking system. We review 35 studies covering 15 European banking systems from 1998 to 2007. Contrasting the central construct hypothesis, we find substantial differences in the produced DC measures. Thus, the economic validity of derived conclusions regarding the competition intensity is challenged. JEL Classification: E43; E52; E58; L16

From exceptional to normal: changes in the structure of US banking since 1920

2020 ◽  
Vol 27 (3) ◽  
pp. 361-375
Author(s):  
Richard Sylla
Keyword(s):  
Banking System ◽  
Commercial Banking ◽  
Good Measure ◽  
Typical Pattern ◽  
Structure Transition ◽  
Banking Systems ◽  
The Us ◽  
European Banking ◽  
Banking Structure

A century ago the US commercial banking system was exceptional in two ways. It was by good measure the largest commercial banking system of any country. And it was different from the commercial banking systems of other leading countries in having tens of thousands of independent banks with very few branches rather than the more typical pattern of a far smaller number of banks with many branches. Today, a century later, the US system is more normal than exceptional, dominated by a small number of very large banks with extensive branch systems. This article describes the US banking-structure transition from exceptional to normal. It closes with an interesting contrast of US and European banking developments.

Peripheral Banking System Fragility and its Effect on EMU Monetary Policy Transmission Mechanism

2021 ◽  
Vol 3 (3) ◽  
pp. 197-227
Keyword(s):  
Monetary Policy ◽  
Risk Sharing ◽  
Banking System ◽  
Transmission Mechanism ◽  
Monetary Policy Transmission ◽  
Banking Systems ◽  
Policy Transmission ◽  
European Banking ◽  
Monetary Policy Transmission Mechanism ◽  
System Inclusion

This article evaluates the transmission through intermediaries taking into consideration the dichotomy between peripheral and core banking systems with regards to the ECB’s standard and non-standard measures of monetary policy by the use of “shadow rate” as an indicator of the monetary policy stance. Bank sector is represented by lending surveys data (BLS) which contain robust quarterly information on changes in loan terms, conditions and standards for both firms and households. By using a Factor Augmented VAR (FAVAR) methodology, we conclude that our model performs well, but it only contradicts the predictions of theory as far as it concerns the credit volume impulse responses functions (IRFs). Selecting a sample of core and peripheral banking systems to apply our methodology, we find the theoretical predictions are confirmed only when the peripheral banking systems are neutralized, indicating that the erratic behaviour of IRFs results from the periphery’s banking system inclusion. We conclude that dislocation in the peripheral segment of European banking system impairs seriously the monetary policy transmission mechanism and, importantly, steps should be undertaken towards risk-sharing in EMU and risk reduction in peripheral banking systems to cure banking system imbalances in the context of EMU.

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