15 September 2012

European Banking Union: Changing Banks That Are Too-Big-to-Save to Banks That Are Too-Big-to-Fail?

If there is one major reason why eurozone bankers should be happy about the prospect of the European Banking Union, then this is the outlook for their banks becoming too-big-to-fail rather than starting to be viewed as too-big-to-save. If there is one major motivation why eurozone will stay intact, then this is the fact that otherwise eurozone banks would be on a worse position to grow when compared to their US and Chinese peers, all other things equal; considering the crucial role that banks have plaid in the financial and economic developments throughout the history, the latter is not a minor issue.

These are basically the two inferences that can be made from an interesting research paper "Do we need big banks? Evidence from performance, strategy and market discipline," (January 2012) written by Demirguc-Kunt, A. (World Bank) and H. Huizinga (Tilburg University and CEPR). This essay provides a brief summary of their findings, plus an analysis for the largest eurozone banks. We finish with the conclusion of whether the European Banking Union will do the trick of saving the day for the European banks.

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  1. This change will probably be a revolutionary step towards European banking. Anyway, where could find the full story?do i need to register on a relevant site to find full essay?

    1. You can find the full story from the referred link: http://www.frxmarket.com/p/european_banking_union_changing_banks_that_are_toobigtosave_to_banks_that_are_toobigtofail_/176

      This essay is available without registration – just go and download it. Feel free to register anyway: needed for accessing certain other stories & there are no registration fees and no spam.