Assessing integration of EU banking sectors using lending margins

Banking integration is generally linked to price convergence. In addition to interest rates, we argue that lending margins provide important information regarding price setting convergence in banking sectors. House purchase and nonfinancial corporations (NFC) lending margins confirm that EU banking integration was affected by financial crises. There is a relatively higher convergence for NFC lending margins, while integration is deeper in the euroarea. The country specific analysis differentiates between integrated and dissimilar EU banking sectors. Besides their financial information content and direct economic impact, lending margins are useful measures of banking integration for policy decisions.