Abstract
US financial market is “the market”. It tells you the price, whether you like it or not. European financial markets are different. EU and Euro-area are very much bank-centric. The bulk of the assets is here immersed in stagnant pools of “hold to maturity” and “historical cost”. In the EU, everything is slower and exposed to judgement and discretion. The reality always catches up at the end, but it takes a while before it shows up. The crisis 2008–2009 demonstrated the difference very convincingly. While American banks had two terrible years and remained profitable ever after, EU banks were profitable throughout the crisis. However, from 2012 onwards they desperately try to crawl away from the grasp of reality going after them.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
“The fact that the market value is lower than the book value suggests that investors believe the book value is overly optimistic. This discrepancy between book values and market values is of immediate practical importance if the bank wants to raise new equity by selling shares in the market.” (Admati & Hellwig, 2014, p. 87).
- 2.
S&P 500 chart.
Reference
Admati, A., & Hellwig, M. (2014). The bankers’ new clothes, Princeton University Press.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
Copyright information
© 2020 The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG
About this chapter
Cite this chapter
Odak, D. (2020). European Banking—Yesterday and Today. In: A Political Economy of Banking Supervision. Springer, Cham. https://doi.org/10.1007/978-3-030-48547-4_12
Download citation
DOI: https://doi.org/10.1007/978-3-030-48547-4_12
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-030-48546-7
Online ISBN: 978-3-030-48547-4
eBook Packages: Economics and FinanceEconomics and Finance (R0)