The European Banking Sector

Abstract

The banking sector is a cornerstone for the development of any economy in the world. This is because the predominant actors in the field — namely, banks or credit institutions¹ — serve as financial intermediaries by enabling the allocation of savings, reduction of risk through diversification, extension of credit and the management of the economy’s payment system. The banking sector’s structure is shaped by several factors such as the degree of governance, the ownership of the bank and the concentration of economic power (Barth, Caprio and Nolle, 2004).