This report looks at the competitiveness of the Norwegian banking sector, in particular with respect to banking regulation and taxation. How do Norwegian banks perform relative to other European banks and relative to other firms in Norway? Do Norwegian banks have a competitive handicap compared with banks from neighbouring European countries, due to stricter regulation in Norway? And if so, what is the cost of this to the Norwegian economy?

This review shows that Norwegian banks have performed well. Furthermore, it concludes that Norwegian banks are, if anything, undertaxed as compared to non-financial firms in Norway and banks in other European countries. On the other hand, Norwegian banks are subject to somewhat stricter regulations than other Nordic banks. However, due to differing macroeconomic conditions and forbearance regimes, as well as barriers to free competition, in the short run the benefits of stricter regulations probably outweigh the costs.