1. The Evolution of Banking Regulation in the Post-Crisis Period: Cooperative and Savings Banks’ Perspective

The US-originated 2007–2009 crisis wave and the euro-originated 2010–2012 crisis wave elicited new regulations on banks’ risk-taking. Basel 3 and its accompanying measures upgraded banks’ capital and implanted further rules. We argue that, especially in Europe’s one-size-fits-all approach, the new rules impacted negatively on cooperative and savings banks. First, by typically relying more on Internal Rating Based models with respect to cooperative and savings banks, commercial banks continued to enjoy larger flexibility in determining their own capital requirements, at times raising the suspicion of regulatory arbitrage. Second, cooperative and savings banks, particularly if smaller sized, were unduly burdened with increasing costs of compliance to a regulation that failed the test of proportionality. We conclude that regulation may have contributed to endangering banking diversity in Europe.