Impact of European Integration on Banks’ Efficiency

In this study we investigate the impact of European integration process on the cost efficiency of EU27 banking markets over period 2003 – 2009. The results provide evidence of both types of convergence, beta and sigma convergence, for the entire period, but ampler during crisis period (2008-2009) than pre-crisis period (2003-2007), these differences being due to a “catching up” process in pre-crises period and rather a “lagging behind” process, in the crises period. These findings confirm that the European integration had a positive impact on cost efficiency and convergence of efficiency during the pre-crises period, but in the crises period it does not seem to have an evident impact. The crises struck differently EU banking systems and there were differences in affecting cost efficiency in old member countries versus new member countries.