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Creating and Governing an Integrated Market for Retail Banking Services in Europe

A Conceptual-Empirical Study of the Role of Regulation in Promoting a Single Euro Payments Area


Matthäus Markus Sielecki

The creation of the Economic and Monetary Union (EMU) has accelerated the harmonization process of regulation and governance in Europe. However, the integration of fragmented retail banking markets still represents a difficult task for regulators. This book investigates the role of EU policy in creating a single market, addressing explicitly questions on the choice of policy measures to overcome barriers to integration persistent in these markets. Based on an analysis of different regulatory theories, the author develops a conceptual framework and illustrates its applicability to the case of the Single Euro Payments Area (SEPA) initiative. The fact that a single market has not yet evolved is less a sign of market or coordination failures than of government failures. The author concludes that, despite the political resistance from national interest groups, regulatory barriers need to be removed first to provide a level playing field for banks and a safe legal environment for consumers.


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G Conclusion 276


276 G Conclusion This study investigated the role of European regulation in facilitating the crea- tion of a single retail banking market. The choice of policy measures to over- come barriers to integration persistent in the retail banking integration process took a center stage in the analysis. This study initially hypothesized that in high- ly fragmented, heterogeneous markets, market forces on their own may fail to develop a single market, so that the intervention of regulation is required. With respect to the role of EU-regulation in promoting market integration this study raised the research question about the key decision factors influencing the choice for regulation compared to a market solution and how can policy inter- ventions be measured with regard to their effectiveness and efficiency. To an- swer the research question and to fill the identified research gap in regulation theory, this study developed a theoretical-conceptual framework that allows both theorists and practitioners to systematically examine the barriers to integration in a market, to identify the underlying market, government or coordination failures justifying policy intervention, and to finally derive efficient and effective policy measures. Due to the general thematic focus on banking regulation and the high com- plexity of the European banking markets, regulation was analyzed by a concep- tual-empirical approach, following an analytical and empirical research strategy. The conceptual model was directly tied to the economic theories on European integration and banking regulation. It assessed the efficiency and effectiveness of regulation, encompassing a comparative institutional approach to regulation and...

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