Anticompetitive regulations in the financial sector hamper economic growth
Anticompetitive regulations in the banking sector inhibit economic growth. That is the conclusion of Pieter IJtsma based on research into the effects of deregulation in the United States banking sector on economic growth in the period between 1970 and 2000. He demonstrates that deregulation leads to positive spill-over effects in that the surrounding states also profit from the reduction in restrictive regulations.
‘My findings are relevant to Europe’, says IJtsma. ‘Compared to the US, where banks operate nationally, the European banking sector is rather segmented. I advocate a more European market. Although the regulations have largely disappeared, it is still difficult for Dutch SMEs to apply for a loan from a French bank. Removing that geographical restriction is likely to have a positive effect on economic growth.’
Saving banks during financial crises: mergers attractive alternative to government support
IJtsma also studied to what extent an increase in market concentration in the EU banking sector has affected the financial stability of the sector. He demonstrates that the increased concentration has hardly affected either the individual stability of banks or the stability of the financial sector as a whole.
‘This means that saving banks during financial crises by means of mergers may be an attractive alternative to doing so through government support’, says IJtsma. Government support for ailing banks could trigger undesirable behaviour by banks, so bail-outs should be the exception rather than the rule. Having demonstrated that increased market concentration as a result of mergers seems to have no detrimental effects on the stability of the sector, it is preferable to let healthy banks take over ailing banks.
More information
- Contact: Pieter IJtsma
- PhD ceremony and thesis Financial stability, economic growth, and the banking sector
________________________________________________
> More news from the Faculty of Economics and Business
> FEB experts in the media
| Last modified: | 29 February 2024 10.02 a.m. |
More news
-
20 May 2025
From oyster mushroom to overalls
A T-shirt made from fungi — or mycelium textile, to be more exact. It would be a great step toward a more sustainable fashion industry. At least it could be if the material could be developed in such a way that it can be used for clothing and if...
-
08 May 2025
6 million euro for large-scale northern project on sustainable healthcare: Care2Change
Care2Change. A large consortium with just about all northern hospitals, local governments, knowledge institutions such as the University of Groningen and the Hanze university of Applied Sciences, and a number of healthcare companies, will cooperate...
-
01 April 2025
Executive Master of M&A and Valuation accredited as joint degree with Vrije Universiteit Amsterdam
Starting 1 September, participants enrolled in the programme will receive a master's degree from both the University of Groningen and Vrije Universiteit Amsterdam upon successful completion.