1 - Consequences of 1992 for Competition in Financial Services: Banking

Abstract

This chapter presents the consequences of 1992 for competition in financial services. While still not in place, the Community has drafted banking directives focused on allowing the unrestricted operation of banks throughout the EEC. The Cecchini Report estimates of increased efficiencies in financial markets are based on reductions in prices for a standard list of banking services. While the Cecchini report analysis provided banking market comparisons not before available, the study did not focus on the relative impact of changes in banking market competition or the potential sources of increased efficiency of service providers. Efficiencies from banking market integration could come from two basic sources—more efficiency in the provision of services and increased competition. The identification of major sources of banking market efficiencies to be expected from either increased competition or cost reductions from larger scale organizations, or both should have an important impact on the focus of policy toward banks and banking related institutions in the future.