As a result the banking sector has not been renewed or restructured in a way that might have happened in a world with efficient market discipline. Inefficient business models have not been outdated in the same way as they have been done in the corporate sector, where the conglomeration trend of the 1980s reversed already some time ago.
The market indications of a diversification discount appear to be too weak.11 The challenge at hand is thus to implement regulatory reforms and policies which help steer the financial sector and banks towards a size and structure, which in a better way support economic growth while maintaining financial stability.