Abstract
Why do large European banks lobby for monetary union? We show in a game-theoretic model that montary union can trigger a change in the structure of the market for international banking transactions with asymmetric effects on profits: large banks are induced to cooperate internationally and gain from European Monetary Union (EMU), while small banks are likely to lose. Monetary union can be interpreted as a device for large banks to push small banks out of the market for cross-border financial services.
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Grüner, H.P., Hefeker, C. Bank cooperation and banking policy in a monetary union: A political-economy perspective on EMU. Open Econ Rev 7, 183–198 (1996). https://doi.org/10.1007/BF01886820
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DOI: https://doi.org/10.1007/BF01886820