European Banking Efficiency, Technology and Growth

by Goddard, John A.; Molyneux, Philip; Wilson, John O. S.

• ISBN13: 9780471494492
• ISBN10: 0471494496
• Edition: 1st
• Format: Hardcover
• Copyright: 2001-07-10
• Publisher: WILEY

Summary

The retail banking sector has undergone immense change over the last decade, such that the industry is barely recognisable. The creation of the European Single Market has of necessity initiated deregulation, whilst the increase in telephone and internet banking has impacted on economies of scale. Financial services organisations are now able to compete in previously uncharted territory, to considerable effect. Taking the reader on a journey of discovery through the economic theory behind the practice and the consequences that follow, the authors have created a fascinating insight into the current state of European retail banking. The authors use their extensive research to display the rationale behind the increasing trend towards consolidation and efficiency. Well argued and well researched, this is a must read for all people with an interest in the European Banking market, from investors to bankers and students alike.

Author Biography

<B>JOHN A. GODDARD</B> is a Senior Lecturer at the Department of Economics, University of Wales Swansea. Prior to this he lectured at the University of Wales, Bangor, and was a researcher at the University of Leeds. He is the author of many articles in academic journals on topics including industrial economics and the economics of the professional football industry. John Goddard also has several years practitioner experience in the UK life insurance sector. <BR> <B>PHILIP MOLYNEUX</B> is Professor of Banking at the School of Accounting, Banking and Economics (SABE) at the University of Wales, Bangor and the Levob Special Chair of Financial Services and Financial Conglomerates at Erasmus University, Rotterdam, Netherlands. He is also co-director of the Institute of European Finance and a highly respected authority on European finance and banking. His many previous works include <I>Financial Innovation</I> and <I>Efficiency in European Banking</I> (both published by John Wiley Sons, Ltd). <BR> <B>JOHN O.S. WILSON</B> is a lecturer in the Department of Management at the University of St. Andrews, specialising in industrial organisation, banking and managerial economics. Prior to this he lectured in economics at London Guildhall University, and has also been a visiting lecturer at the University of Wales, Bangor. He has co-authored <I>Essentials of Industrial Organization</I> (Financial Times, Prentice Hall) and has also has written many papers on subjects ranging from the growth of European banks, to attendance patterns in the English Rugby Football League. <P>

Table of Contents

Acknowledgements	xi
List of tables	xii
List of figures	xv
Introduction	1	(6)
Current Developments in European Banking	7	(18)
Introduction	7	(1)
Trends in the Structure and Performance of European Banking	8	(8)
Competition in Financial Services in Europe	16	(2)
The Role of Core Banks and the Rationale for Consolidation	18	(3)
Impact of European Monetary Union	21	(2)
Conclusion	23	(2)
The Economics of Industry Structure	25	(42)
Introduction	25	(1)
The Neoclassical Theory of the Firm	26	(4)
Measures of Concentration	30	(4)
The Structure--Conduct--Performance Paradigm	34	(6)
Entry and Exit	40	(11)
Determinants of Market Structure	51	(14)
Conclusion	65	(2)
Market Structure and the Growth and Performance of Banks	67	(32)
Introduction	67	(1)
Market Structure, Performance and Efficiency in European Banking	68	(10)
Entry and Exit Barriers and Contestability in Banking	78	(5)
Determinants of Concentration in Banking Markets	83	(14)
Conclusion	97	(2)
Efficiency in European Banking	99	(42)
Introduction	99	(2)
Banks' Production Processes: Measuring Inputs and Outputs	101	(4)
Defining Banks' Productive Efficiency	105	(4)
Economies of Scale and Scope	109	(11)
Recent Approaches to Measuring Banks' Productive Efficiency	120	(7)
Productive Efficiency in Banking: Empirical Evidence	127	(6)
Bank Efficiency: Managerial Issues	133	(6)
Conclusion	139	(2)
Technological Change in European Banking	141	(26)
Introduction	141	(1)
Customer-facing Technologies	142	(6)
Internet Banking	148	(8)
Bank Service Delivery Channels	156	(3)
Customer Relationship Management Systems	159	(1)
Business-management Technologies	160	(2)
Core Processing Technologies	162	(1)
Support and Integration Technologies	162	(1)
Technological Change in European Banking: Empirical Evidence	163	(2)
Conclusion	165	(2)
The Law of Proportionate Effect: Previous Empirical Research	167	(26)
Introduction	167	(2)
The Law of Proportionate Effect and Other Influences on Concentration	169	(5)
Empirical Tests of the Law of Proportionate Effect Based on the Analysis of Firm Size Distributions	174	(3)
Regression-based Tests of the Law of Proportionate Effect: Various Industries	177	(9)
Regression-based Tests of the Law of Proportionate Effect: Banking	186	(4)
Conclusion	190	(3)
Stochastic Models of the Growth of Banks	193	(30)
Introduction	193	(1)
Previous Evidence	194	(2)
A Stochastic Model of Growth for a Fixed Population of Banks	196	(12)
A Stochastic Model of Growth for a Population of Banks that Changes over Time	208	(13)
Conclusion	221	(2)
Empirical Tests of the Law of Proportionate Effect for European Banking	223	(36)
Introduction	223	(1)
Measures of Convergence and Divergence	224	(3)
Empirical Methodology	227	(7)
The Data Set	234	(9)
Empirical Results	243	(13)
Conclusion	256	(3)
References	259	(26)
Index	285