When the global financial crisis hit in 2008, banks around the world collapsed or came close to it. Governments were forced to step in with billions of pounds of public money to stop the system imploding.

In response, regulators promised change. In the UK, these reforms were reinforced by ring-fencing, which separated everyday retail banking from riskier investment activities. The aim was simple: protect the public.

Our latest research looks at what actually happened next. Using more than 20 years of data, we studied how these post-crisis rules affected the UK’s four largest retail banks: HSBC, Barclays, Lloyds Banking Group and NatWest Group. In a system dominated by a handful of large institutions, there is a deeper question. If regulation made banks both safer and richer, who really benefited?

After 2008, regulators cracked down on excessive risk-taking. Capital rules were tightened, forcing banks to rely more on their own funds. Liquidity rules required them to hold enough cash and safe assets to survive sudden shocks.

These changes worked. The system is now far more resilient than it was before the crash. But this came at a cost to competition in the banking market – and so to consumers.

Higher capital levels consistently........

© The Conversation