This report offers a comprehensive survey of the most recent empirical research on the state and development of retail banking integration in Europe. The authors - Stefanie Kleimeier of Maastricht University and Harald Sander of the University of Applied Sciences Cologne - document a broad consensus that retail banking integration is still limited, although it seems to have recently gained momentum. There is less agreement, however, on how to measure the phenomenon. The authors warn that the various types of integration measures should be interpreted with care, due to their shortcomings and in order to avoid jumping to the wrong policy conclusion. In particular, they caution against misreading retail interest rate convergence as a sign of integration and against misinterpreting general developments in banking as genuine achievements in European integration. Rather, they find that the recent acceleration in integration has mostly been driven by wholesale financial market integration and more general financial developments, leading them to conclude that integration policies need to be supplemented by competition, financial development and financial stability policies.
1 Introduction 1
2 Integrating Europe's retail banking market : where do we stand? 5
2.1 European financial markets : state and development 5
2.2 Measuring integration and the efficiency of European retail banking 9
2.3 The current state of retail banking integration 13
2.4 Integration of the retail banking market as an economic means 45
3 Policy implications 68
3.1 General policy considerations 68
3.2 Securitisation 69
3.3 Ownership and supervision 72
4 Conclusions 75
Bibliography 79
