Evidence shows that financial integration in the euro area is retrenching at a quicker pace than outside the union. Home bias persists: Governments compete on funding costs by supporting ‘their' banks with massive state aids, which distorts the playing field and feeds the risk-aversion loop....

Purpose – The purpose of this paper is to assess the impact of the impact of the single currency on the institutional design of the banking union, through evidence on the financial integration process. Design/methodology/approach – Data analysis uses multiple sources of data on key drivers...