## Barriers to a European Banking Union

_IMF Working Papers, June 12, 2026_

## Source details

**Canonical URL:** [Barriers to a European Banking Union](https://www.imf.org/en/publications/wp/issues/2026/06/12/barriers-to-a-european-banking-union-576858)

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## Bibliographic details
- Authors: Damien Capelle, Adriano Fernandes, J.J. Kruger, Peter McAdam
- Published: June 12, 2026
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229049696.001

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### Summary
- Quantifies barriers to cross-border banking within the euro area and their consequences for credit allocation and output.
- Uses loan-level data from the European credit registry (AnaCredit) and group structures (RIAD).
- Estimates barriers at the country-pair level for:
  - relationship formation between banks and firms,
  - loan pricing (interest rates and loan quantities),
  - banks’ branching and cross-border entry decisions.
- Embeds empirical estimates into a quantitative spatial general equilibrium model with heterogeneous banks and firms subject to cross-border frictions.
- Partially relaxing frictions predicts sizable and heterogeneous output gains across euro area countries, driven primarily by increases in capital and labor rather than improvements in allocative efficiency.

### Key empirical findings
- Barriers to cross-border relationships between banks and firms are large.
- Barriers to cross-border bank entry are large.
- Wedges on interest rates and loan quantities are comparatively small.
- The estimated edges are strongly associated with differences in national banking regulations, measured using a novel dataset on regulatory distances.

### Methodology and data
- Microdata sources:
  - AnaCredit (European credit registry) — loan-level data.
  - RIAD — bank group structures.
- Estimation targets:
  - country-pair level frictions in relationship formation, loan pricing, and branching decisions.
- Modeling approach:
  - Quantitative spatial general equilibrium model with heterogeneous banks and firms.
  - Frictions incorporated in relationship formation, loan pricing, and bank entry.

### Model implications and channels
- Relaxation of cross-border frictions leads to:
  - sizable and heterogeneous output gains across euro area countries.
  - gains mainly through increases in capital and labor inputs.
  - limited gains through allocative efficiency improvements relative to input increases.

### Subject areas and keywords
- Subject: Bank credit, Credit, Cross-border banking, Deposit insurance, Financial crises, Financial institutions, Financial services, Loans, Money
- Keywords: Bank credit, bank entry, banking union, banks, cost of capital, Credit, credit allocation, Cross-border banking, cross-border frictions, Deposit insurance, Europe, European financial integration, IMF working papers, loan pricing, Loans, output gain

*Barriers to a European Banking Union, IMF Working Papers, June 12, 2026.*

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## Content in this bundle

- **Working Paper**
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_Source: https://www.imf.org/en/publications/wp/issues/2026/06/12/barriers-to-a-european-banking-union-576858_