The State of the Banking Sector in Europe:
This paper reviews the state of the banking sector in Europe. At the aggregate level, the empirical data suggest that the Baltics, Cyprus, Greece and Ireland, in particular, are hit by a strong decline in lending in the wake of the financial crisis. This deleveraging is mainly caused by a reduction...
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| Format: | Elektronisch E-Book |
| Sprache: | English |
| Veröffentlicht: |
Paris
OECD Publishing
2014
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| Schriftenreihe: | OECD Economics Department Working Papers
no.1102 |
| Schlagworte: | |
| Online-Zugang: | Volltext |
| Zusammenfassung: | This paper reviews the state of the banking sector in Europe. At the aggregate level, the empirical data suggest that the Baltics, Cyprus, Greece and Ireland, in particular, are hit by a strong decline in lending in the wake of the financial crisis. This deleveraging is mainly caused by a reduction in cross-border supply of credit. We also examine the capital position of the European banking system, using November 2013 stock market data. In the basic scenario to restore capital to a market based leverage ratio of 3%, EUR 84 billion of extra capital would be needed for the largest 60 banks. At the bank level, the top tertile of well-capitalised banks (with a market based leverage ratio well above 4%) continues lending. By contrast, the 2nd tertile of medium-capitalised banks (between 3 and 4%) and the 3rd tertile of weakly capitalised banks (well below 3%) show a strong decline in lending. Moreover, the market-to-book ratio is below one for these banks. The market thus gives a lower value to these banks. Our findings provide prima facie evidence of a credit crunch in Europe. Another fallout of the financial crisis is an increase, though very modest, of concentration in banking in the distressed countries (Greece, Ireland, Portugal, Spain and Italy). The enhancement of financial stability through (forced) M&As seems to come at the expense of reduced competition. |
| Beschreibung: | 1 Online-Ressource (36 p.) 21 x 29.7cm. |
| DOI: | 10.1787/5k3ttg7n4r32-en |
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| 520 | |a This paper reviews the state of the banking sector in Europe. At the aggregate level, the empirical data suggest that the Baltics, Cyprus, Greece and Ireland, in particular, are hit by a strong decline in lending in the wake of the financial crisis. This deleveraging is mainly caused by a reduction in cross-border supply of credit. We also examine the capital position of the European banking system, using November 2013 stock market data. In the basic scenario to restore capital to a market based leverage ratio of 3%, EUR 84 billion of extra capital would be needed for the largest 60 banks. At the bank level, the top tertile of well-capitalised banks (with a market based leverage ratio well above 4%) continues lending. By contrast, the 2nd tertile of medium-capitalised banks (between 3 and 4%) and the 3rd tertile of weakly capitalised banks (well below 3%) show a strong decline in lending. Moreover, the market-to-book ratio is below one for these banks. The market thus gives a lower value to these banks. Our findings provide prima facie evidence of a credit crunch in Europe. Another fallout of the financial crisis is an increase, though very modest, of concentration in banking in the distressed countries (Greece, Ireland, Portugal, Spain and Italy). The enhancement of financial stability through (forced) M&As seems to come at the expense of reduced competition. | ||
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| spelling | Schoenmaker, Dirk VerfasserIn aut The State of the Banking Sector in Europe Dirk, Schoenmaker and Toon, Peek = L'état du secteur bancaire en Europe / Dirk, Schoenmaker et Toon, Peek L'état du secteur bancaire en Europe Paris OECD Publishing 2014 1 Online-Ressource (36 p.) 21 x 29.7cm. Text txt rdacontent Computermedien c rdamedia Online-Ressource cr rdacarrier OECD Economics Department Working Papers no.1102 This paper reviews the state of the banking sector in Europe. At the aggregate level, the empirical data suggest that the Baltics, Cyprus, Greece and Ireland, in particular, are hit by a strong decline in lending in the wake of the financial crisis. This deleveraging is mainly caused by a reduction in cross-border supply of credit. We also examine the capital position of the European banking system, using November 2013 stock market data. In the basic scenario to restore capital to a market based leverage ratio of 3%, EUR 84 billion of extra capital would be needed for the largest 60 banks. At the bank level, the top tertile of well-capitalised banks (with a market based leverage ratio well above 4%) continues lending. By contrast, the 2nd tertile of medium-capitalised banks (between 3 and 4%) and the 3rd tertile of weakly capitalised banks (well below 3%) show a strong decline in lending. Moreover, the market-to-book ratio is below one for these banks. The market thus gives a lower value to these banks. Our findings provide prima facie evidence of a credit crunch in Europe. Another fallout of the financial crisis is an increase, though very modest, of concentration in banking in the distressed countries (Greece, Ireland, Portugal, Spain and Italy). The enhancement of financial stability through (forced) M&As seems to come at the expense of reduced competition. Finance and Investment Economics Peek, Toon MitwirkendeR ctb FWS01 ZDB-13-SOC FWS_PDA_SOC https://doi.org/10.1787/5k3ttg7n4r32-en Volltext |
| spellingShingle | Schoenmaker, Dirk The State of the Banking Sector in Europe Finance and Investment Economics |
| title | The State of the Banking Sector in Europe |
| title_alt | L'état du secteur bancaire en Europe |
| title_auth | The State of the Banking Sector in Europe |
| title_exact_search | The State of the Banking Sector in Europe |
| title_full | The State of the Banking Sector in Europe Dirk, Schoenmaker and Toon, Peek = L'état du secteur bancaire en Europe / Dirk, Schoenmaker et Toon, Peek |
| title_fullStr | The State of the Banking Sector in Europe Dirk, Schoenmaker and Toon, Peek = L'état du secteur bancaire en Europe / Dirk, Schoenmaker et Toon, Peek |
| title_full_unstemmed | The State of the Banking Sector in Europe Dirk, Schoenmaker and Toon, Peek = L'état du secteur bancaire en Europe / Dirk, Schoenmaker et Toon, Peek |
| title_short | The State of the Banking Sector in Europe |
| title_sort | state of the banking sector in europe |
| topic | Finance and Investment Economics |
| topic_facet | Finance and Investment Economics |
| url | https://doi.org/10.1787/5k3ttg7n4r32-en |
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