Worldwide concentration in the banking sector: causes and potential effects

Abstract

During the 90s, several factors affected the market structure and the standard of competition in the banking system, diluting barriers represented by country frontiers. First there were measures directed toward liberalization and deregulation. Secondly, there were technological innovations in data processing and risk management. A process of industry consolidation got under way with the formation of large banking groups that provided a wide range of products and financial services, which converged in many countries towards banking denationalization. It is possible to identify a number of positive and negative effects thereof, whether for those requiring financial services or for economies as a whole, implying new challenges for authorities in their pursuit of an atmosphere of competition combined with one of systemic stability.