The Costs of Supervisory Fragmentation in Europe

31 Pages Posted: 17 Jan 2005 Last revised: 11 Sep 2018

See all articles by Martin Schüler

Martin Schüler

Centre for European Economic Research (ZEW)

Friedrich Heinemann

ZEW – Leibniz Centre for European Economic Research; University of Heidelberg - Alfred Weber Institute for Economics

Date Written: 2005

Abstract

Financial markets in Europe become more and more integrated. The persisting fragmentation of financial supervision, however, constitutes a lasting obstacle to integration. The aim of this paper is to assess these costs of supervisory fragmentation. We find clear evidence for the existence of economies of scale in banking supervision. An increase in supervisory output by one percent causes institutional supervisory cost to rise by only some 0.5 percent. Based on these estimation results we predict institutional cost saving of around 15 percent in a plausible simulation scenario representing a cost-efficient European supervisory framework.

Keywords: Financial supervision, costs, economies of scale

JEL Classification: G28

Suggested Citation

Schüler, Martin and Heinemann, Friedrich, The Costs of Supervisory Fragmentation in Europe (2005). ZEW - Centre for European Economic Research Discussion Paper No. 05-001, Available at SSRN: https://ssrn.com/abstract=649641 or http://dx.doi.org/10.2139/ssrn.649641

Martin Schüler (Contact Author)

Centre for European Economic Research (ZEW) ( email )

Postfach 103443
Mannheim, D-68034
Germany
+49/621/1235-148 (Phone)
+49/621/1235-223 (Fax)

HOME PAGE: http://www.zew.de/en/mitarbeiter/mitarbeiter.php3?action=mita&kurz=msh

Friedrich Heinemann

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

HOME PAGE: http://www.zew.de

University of Heidelberg - Alfred Weber Institute for Economics ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

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