Does the size and market structure of the banking sector have an effect on the financial stability of the European Union?

The empirical results find that the banking sectors within EU are not homogeneous and also that there is asymmetry between the performance of EU-15 (i.e., large banking sectors) and EU-12 banking sectors (i.e., small banking sectors). Generally, size had a negative impact on financial stability within the EU banking sectors. However, this paper finds no strong evidence for a relationship between competition and risk-taking behavior by EU banks. Finally, this paper finds evidence for the existence of a TBTF effect within EU-15 banking sectors.