Table Of ContentBanking, Risk and Crises
in Europe
European economies have been plagued by successive crises, from the Global
Financial Crisis (GFC) to the COVID-19 pandemic, through to the economic
and geopolitical instability in Ukraine. These events, the uncertainty they generate
combined with dynamic technological progress and significant sociocultural
changes, have profoundly modified the character of modern finance. Understanding
what happened, what mechanisms worked, and the reaction of the banking sector,
bank customers, and policymakers require an in-depth and structured analysis.
This book critically assesses the impact of these events, notably the COVID-19
pandemic, on the performance of the banking sector in Europe and serves as a
compendium of knowledge on recent changes in European banking from two
perspectives: firstly, European banking transformation, analyzing the process of
what has already taken place, in particular the GFC and COVID-19 crises;
secondly, challenges facing the operations and strategic management of European
banks. It identifies specific areas of impact on the activity of commercial banks
and the determining factors that will shape the economic and financial condition
of banks and their customers – borrowers – in the future. Risk management,
particularly credit risk, is a key focus of this volume. Each chapter, implicitly or
explicitly, address a variety of questions that can help the reader to understand
the complex nature of the transformation of the banking sector.
The book provides a structured reference for those concerned with the
impact of volatility on the business models of modern banks. As such, it will
find a broad audience among students, academics, banking, financial, business,
and industry professionals, policymakers, and market regulators.
Renata Karkowska, Ph.D., is Associate Professor at the University of Warsaw,
Faculty of Management.
Zbigniew Korzeb, Ph.D., is Associate Professor at the Bialystok University of
Technology, Faculty of Engineering Management.
Anna Matysek-Jędrych, Ph.D., is Professor at the Poznań University of
Economics and Business, Institute of International Business and Economics.
Paweł Niedziółka Ph.D., is Associate Professor at the SGH Warsaw School of
Economics, Collegium of Socio-Economics.
Routledge International Studies in Money and Banking
Negative Interest Rates and Financial Stability
Lessons in Systemic Risk
Karol Rogowicz and Małgorzata Iwanicz-Drozdowska
Digital Finance and the Future of the Global Financial System
Disruption and Innovation in Financial Services
Edited by Lech Gąsiorkiewicz and Jan Monkiewicz
Sovereign Debt Sustainability
Multilateral Debt Treatment and the Credit Rating Impasse
Daniel Cash
Environmental Risk Modelling in Banking
Edited by Magdalena Zioło
Money, Debt and Politics
The Bank of Lisbon and the Portuguese Liberal Revolution of 1820
José Luís Cardoso
The Digital Revolution in Banking, Insurance and Capital Markets
Edited by Lech Gąsiorkiewicz and Jan Monkiewicz
Activist Retail Investors and the Future of Financial Markets
Understanding YOLO Capitalism
Edited by Usman W. Chohan and Sven van Kerckhoven
Banking, Risk and Crises in Europe
From the Global Financial Crisis to COVID-19
Renata Karkowska, Zbigniew Korzeb, Anna Matysek-Jędrych and Paweł Niedziółka
For more information about this series, please visit: www.routledge.com/Rout
ledge-International-Studies-in-Money-and-Banking/book-series/SE0403
Banking, Risk and Crises
in Europe
From the Global Financial Crisis
to COVID-19
Renata Karkowska, Zbigniew Korzeb,
Anna Matysek-Jędrych and
Paweł Niedziółka
First published 2023
by Routledge
4 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
605 Third Avenue, New York, NY 10158
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2023 Renata Karkowska, Zbigniew Korzeb, Anna Matysek-Jędrych and
Paweł Niedziółka
The right of Renata Karkowska, Zbigniew Korzeb, Anna Matysek-Jędrych
and Paweł Niedziółka to be identified as authors of this work has been
asserted in accordance with sections 77 and 78 of the Copyright, Designs
and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or
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known or hereafter invented, including photocopying and recording, or in
any information storage or retrieval system, without permission in writing
from the publishers.
Trademark notice: Product or corporate names may be trademarks or
registered trademarks and are used only for identification and explanation
without intent to infringe.
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Names: Karkowska, Renata, author.
Title: Banking, risk and crises in Europe : from the global financial crisis to
COVID-19 / Renata Karkowska, Zbigniew Korzeb, Anna
Matysek-Jędrych, Paweł Niedziółka.
Description: Abingdon, Oxon ; New York, NY : Routledge, 2023. |
Series: Routledge international studies in money and banking | Includes
bibliographical references and index.
Identifiers: LCCN 2022050521 (print) | LCCN 2022050522 (ebook) |
ISBN 9781032397429 (hardback) | ISBN 9781032397436 (paperback) |
ISBN 9781003351160 (ebook)
Subjects: LCSH: Banks and banking—Europe. | Financial risk
management—Europe. | Financial crises—Europe—History—21st
century.
Classification: LCC HG2974 .K37 2023 (print) | LCC HG2974 (ebook) |
DDC 332.1094—dc23/eng/20221020
LC record available at https://lccn.loc.gov/2022050521
LC ebook record available at https://lccn.loc.gov/2022050522
ISBN: 978-1-032-39742-9 (hbk)
ISBN: 978-1-032-39743-6 (pbk)
ISBN: 978-1-003-35116-0 (ebk)
DOI: 10.4324/9781003351160
Typeset in Bembo
by Apex CoVantage, LLC
This book is the result of research realised under the Agreement concluded
by the University of Warsaw (Faculty of Management), the Bialystok
University of Technology (Faculty of Engineering Management), the
Poznan University of Economics and Business (the Institute of International
Business and Economics) and the SGH Warsaw School of Economics
(Collegium of Socio-Economics).
Contents
List of figures vi
List of tables viii
List of authors x
1 Introduction: European banking system transformation
(the COVID-19 impact) 1
2 COVID-19 versus historical pandemics: economic, social,
and political impact 9
3 Banking crises: theory, practice, and the special case of a
pandemic as a source of a banking crisis 28
4 European banking sector performance: from Global
Financial Crisis to COVID-19 pandemic 53
5 Policy response in the banking sector in the context of the
COVID-19 epidemic 68
6 Changing the business model of banking operation 86
7 Transforming credit risk in the light of the COVID-19 pandemic 107
8 Challenges of other banking risks management in the
context of the COVID-19 pandemic 131
9 Post-COVID-19 European banking sector: what is the
‘new normal’? 159
Index 180
Figures
3.1 Cumulative confirmed COVID-19 cases per million people in
selected European countries 43
3.2 Cumulative confirmed COVID-19 deaths per million people
in selected European countries 44
4.1 Operating income vs. operating expenses in total assets for the
European banking sector over the years 2007–2021 (in %) 62
4.2 Interest income vs. noninterest income in total assets for the
European banking sector over the years 2007–2021 (in %) 62
4.3 Interest income vs. fee and commission in total income for
the European banking sector over the years 2007–2021 (in %) 63
5.1 Economic impact of the COVID-19 pandemic 70
5.2 Value of stimulus packages introduced in selected countries in
2020 (% of 2019 GDP) 72
5.3 Change in general government gross debt expressed as %
GDP in Q2, 2020 relative to the previous quarter in selected
EU countries 73
5.4 Changes in interest rates of central banks in selected European
countries 78
6.1 Structure of interest and noninterest income in banks’ total
income in selected European sectors (average for the period
2015Q3–2020Q3) 90
6.2 Changes in the share of interest and noninterest income in
banks’ total income in the European sector from 2015Q1
to 2020Q3 91
6.3 Average changes of cost-to-income ratio in the European
banking sectors in relation to ROA efficiency ratio 94
6.4 Preferred channels in product research vs. sales (%, by region) 100
7.1 Impact of COVID-19 pandemic on credit risk 108
7.2 Value of outstanding loans for nonfinancial corporations in
selected EU countries in 2020 (millions of EUR) 109
7.3 Value of outstanding consumer loans for households in
selected EU countries in 2020 (millions of EUR) 110
Figures vii
7.4 Value of outstanding mortgages for households in selected
European Union countries in 2020 (millions of EUR) 111
7.5 Resilience of credit collateral to the effects of COVID-19 116
7.6 Forbearance and classification of exposures 123
8.1 Key COVID-19 cyberthreats types (in %) 135
8.2 Interactions between climate and banking risks 140
8.3 Climate stress test model in the Netherlands Bank 150
9.1 Shaping of stock indices in selected European countries 168
9.2 Shaping of crude oil and natural gas futures prices (USD) 169
9.3 Shaping of gold futures prices (USD) 169
9.4 USD/PLN and USD/EUR volatility 170
9.5 Consolidated positions of residents of Russia (foreign banks) 172
9.6 Share of banks’ IT spending on new technology in North
America and Europe from 2013 to 2022 (percentage) 175
9.7 Number of employees in EU credit institutions (in thousands) 175
Tables
2.1 Mortality and depopulation process versus pandemics 11
2.2 How different is COVID-19? 23
3.1 Review of selected theoretical concepts behind
the banking crisis 29
3.2 List of selected global pandemic and epidemic events 43
4.1 Banking sector performance – review of industry and
bank-specific drivers 54
4.2 Descriptive statistics of the banking sector performance in
the EU 60
5.1 Selected European central banks’ response to COVID-19 –
first wave 77
6.1 Descriptive statistics 93
6.2 Correlation matrix 94
6.3 COVID-19 and bank interest income in commercial banks
in the European countries (full sample), over the period
2020Q1–2021Q1 95
6.4 COVID-19 and bank noninterest income in commercial
banks in the European countries (full sample), over the period
2020Q1–2021Q1 95
7.1 Sectors most negatively afflicted by lockdown and pandemic
effects in Poland 113
7.2 List of the most and least resilient economic sub-sectors to the
COVID-19 crisis in terms of rates of return differentials and
coefficients of variation 114
7.3 Collateral adjustment ratios used by banks 117
7.4 Credit moratoria in selected European countries 118
7.5 Loans and advances with non-expired EBA compliant
moratoria 121
7.6 Loans and advances with expired EBA compliant moratoria 121
8.1 The bank system of the climate risk management 141
8.2 Reporting climate risk in banks – an overview of methods 143
8.3 Selected initiatives relating to commercial banks in the
context of their role in environmental and climate protection 144
Tables ix
8.4 Selected sources of financing for the energy transformation
in the European Union (“European Green Deal”) 152
8.5 Sources of funding for New Generation EU program
(in EUR b) 154
9.1 European banks in Russia (daughter banks and branches
registered in Russia) 171
9.2 European banks in Ukraine 173
