Financial Crisis and the Changing Structure of Banking Firms and Industry: a Cross Country Analysis

Abstract

This paper analyzes the changing structure of the Italian and European banking firms and industry. The main aim is to identify the fundamental changes of the underlying economics of banking through the analysis of banks’ balance sheets. Commercial banks have progressively moved from traditional banking to new forms of financial intermediation. It is changing the fundamentals of banking business. The paper discusses the implications of this changing in terms of organizational structure of banking firms, business operations of banks, and structure of the financial system and banking industry. The research points out that the role of traditional bank is in decline. Banks are losing their predominant role as deposit takers and lenders to firms. Substantial structural changes are facing the banking business. These changes have deep effects on the operation of banking firms, the structure and organization of banking firms, the structure of banking industry, the financial stability of banking firms and banking industry, and sustainability of new banking business models. Three level of analysis are affected: product/service level, firm level, and industry level.