Is Europe Overbanked?

European Systemic Risk Board

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Date Published 2014
Primary Author Reports of the Advisory Scientific Committee
Other Authors
Theme Housing Market Analysis


The Advisory Scientific Committee of the ESRB explores the question whether there are too many banks in Europe. In a three step process, the paper first reviews basic facts about the banking system in Europe, including its size, recent growth, concentration and leverage, and compare these data with those of other banking systems. Secondly, the article investigates whether banks’ recent expansion is associated with (i) lower and more volatile economic growth; and (ii) excessive risk-taking and more frequent financial crises, including banking and sovereign debt crises. Lastly, the authors explore the cause behind the large number of banks in Europe, the threats and risks they pose to the European economy, and possible remedies to the situation.

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