Is competition in the banking sector welcome?

Few will disagree with the statement that banks are important for economic growth and welfare, but what about banking competition? Is it good or bad? Furthermore, what do we know about the intensity of banking competition? Does deregulation, or the creation of a single European market, increase or decrease that intensity? These questions were discussed at a workshop that TILEC organized together with the Netherlands Bureau for Economic Policy Analysis (CPB) and the Dutch Ministry of Economic Affairs on 31 January 2008. The speakers were Michel van Leuvensteijn (CPB), Nicola Cetorelli (Federal Reserve, New York) and Arnoud Boot (ACLE, University of Amsterdam). The main lessons that emerged from the workshop are that banking competition is good but that, in contrast to the US, the intensity of banking competition in the Euro
area seems to be decreasing. Taken together, this does not bode well for Europe. Additional details can be found here.