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Too much, too fast? The sources of banks’ opposition to European banking structural reforms

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Abstract

This article examines banks’ positions on the 2014 proposals for EU banking structural reforms. Centralization of authority in banking regulation and supervision has been a legislative priority in the European Union (EU) since 2008 in order to address regulatory shortcomings in the aftermath of the global finanical crisis. European decision makers have introduced more stringent capital adequacy requirements and transferred greater powers to the European Supervisory Authorites. In 2014, the European Commission put forward a proposal for banking structural reforms comprised of two elements: a ban on proprietary trading and mandatory separation of some trading activities from the deposit-taking entity. We refer to ‘regulatory cascading’ in order to conceptualize the rapid and successive introduction of legislative packages designed to fix problems and gaps in the EU banking regulatory framework. Our analysis shows that the majority of European banks and financial services associations are opposed to further banking structural reforms at the EU level. We find evidence that banks domiciled in member states that have already passed reforms prefer those over EU alternatives. Large internationalized banks are most opposed to further EU banking structural reforms.

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Acknowledgements

The authors are very grateful to the organizers of and participants in several conferences and workshops which allowed us to develop our argument: ‘National versus Supranational Banking Supervision’ at the ECPR Joint Sessions of Workshops in Salamanca, Spain in 2014; NIG annual conference in Delft, the Netherlands in 2014; workshop on ‘National versus Supranational Banking Regulation after the Crisis: Dilemmas for States’ in Denver, USA in 2015. They would like to thank Rachel Epstein for her invaluable feedback and encouragement.

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Correspondence to Aneta Spendzharova.

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4graduated from the Research Master’s European Studies at Maastricht University. Currently, she is a graduate student at Leiden University conducting research within the project ‘When does Government listen to the Public?’ (GovLis). Her research interests are in the areas of European agencies, regulatory governance and interest groups.

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Spendzharova, A., Versluis, E., Radulova, E. et al. Too much, too fast? The sources of banks’ opposition to European banking structural reforms. J Bank Regul 17, 133–145 (2016). https://doi.org/10.1057/jbr.2015.16

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  • DOI: https://doi.org/10.1057/jbr.2015.16

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