The aim of this analysis is to assess the impact of the euro adoption on efficiency and competition of the Polish banking sector. Efficiency and competition of banks are the main factors important for the stability of the financial sector through their influence on banks' profitability, access to external funding and the country's economic development.
The results of the empirical analysis indicate that the main driver of the rise in efficiency and competition in the Polish banking sector was Poland's entry into the European Union. The degree of both efficiency and competition was higher in the segment of retail banking than in corporate banking.
The results of the analysis of efficiency and competition of the Polish banking sector also lead to the conclusion that Poland's entry into the euro area is not likely to significantly change the degree of competition in the banking sector as a whole, and may only impact the segment of corporate banking.
It seems that Poland's entry into the euro area will mainly result in an increase in competition and efficiency in the segment of corporate banking. Retail banks, on the other hand, will continue to be of a local character owing to the bank lending relationship with individual customers and SME. This conclusion is based on observations noted in the euro area banking sectors after the creation of EMU.