Abstract

Since the 1980s, deregulation, financial market development and technological progress as the representative of the business environment changes, driving the global banking industry has undergone a fundamental structural change. Business environment changes so that commercial banks have traditionally dominant position eroded, competitive banking market can be enhanced, commercial banks operating in the huge pressure of coping strategies are implemented through mergers and acquisitions and integration of large-scale operation, the final structure of the banking market and asset and income structure of fundamental change. Since 1980s, great changes have taken place in the environment in which banks operate. The combined effects of these changes as the deregulation, evolution of financial markets and technical advances, have fundamentally transformed the banking industry. This paper, based on the banking theory and the experience of development in the European banking sector, explores the relation between operating environment change and the banking structural evolution. We find that, the great changes have eroded the foundation for banks' existence and development, increasing the banking market contestability. Facing the circular pressures, the banks responded by consolidation to achieve the scale and diversification. This accommodative strategy leads to the fundamental structural transformation in banking industry