Think Tank

This study analyses why European banks, despite improved cost efficiency, continue to trade at lower valuations than their United States (US) counterparts. The gap stems from limited growth potential due to market fragmentation and underdeveloped capital markets. To close this competitiveness divide, the study calls for accelerating the Savings and Investment Union (SIU), expanding investment banking capacity, and implementing smart banking regulation and supervision that reinforces market discipline ...

This paper provides an assessment of the EU banks’ competitiveness by using the US as a benchmark and looking at four interconnected dimensions: profitability, stability, ability to supply intermediation services and raise funds, product affordability for customers. Our results show that profitability, while being a key performance indicator in a market economy, does not measure the banks’ contribution to welfare more broadly and may even signal excessive market power.

This paper reviews a recent data on property markets and real estate-related bank loans in the euro area, looking at prices, mortgages, credit quality measures and some indicators of the costs faced by borrowers. It then takes a closer look at certain origination and monitoring practices adopted by significant institutions, as recently analysed by the ECB, which apparently show some room for improvement. Finally, it addresses property-related exposures held by non-bank financial institutions, with ...

The expanded use of performance-based instruments, notably as used in the Recovery and Resilience Facility, requires adaptation of budgetary control. This study examines how key changes, such as financing not linked to costs and the use of milestones and targets to trigger disbursement alter budgetary control, The study also puts forward recommendations for the CONT committee of the European Parliament to consider in influencing negotiations on the next MFF.

The European financial system faces significant risks from excessive bank lending to the real estate sector. Historical trends show a strong link between real estate credit booms and banking crises. Current data indicate that real estate loans constitute a substantial share of banks' corporate loan portfolios, with varying risk levels across countries. Key drivers include expansionary ECB policies and regulatory incentives favouring mortgage lending. Strengthening oversight, improving data collection ...