EMU: some unanswered questions

structures will tend to vanish. In table 1, it can be seen that the degree of bank concentration
in European countries is converging to similar values. Other relevant factor, is the reduction
of the need of having a vast and extensive network of bank offices in the territories where the
financial agents wants to operate. Thanks to new information technologies and to the increase
of competition between regional and non-regional financial institutions, there is a clear
incentive to operate in the greatest number of territories as marginal costs are continuously
decreasing.

Table 1. Bank concentration at a national level: Deposits of the five most important financial
entities as a percentage of total financial deposits

Source: ECB (1999)

Taking into account the previous exposition, if we want to evaluate the existence of
differences in regional responses to monetary policy, we should consider information about
three different aspects: the industry-mix, the firm size and the financial structure. However,
the most important are the two first as it seems quite plausible that regional differences in
financial structures will tend to disappear (or at least reduce) in a near future. For this reason,
the methodology that we propose to analyse the different impact of monetary policy will only
consider the two first determinants.

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