Why have share prices of euro-zone banks declined so steeply?
Since February 2018, the share prices of euro-zone banks have declined steeply. The banks' beta is very high , and yet, the ir financial strength has been markedly reinforced. Investors are probably concerned about: Euro-zone banks' exposure to some countries in trouble (Turkey); The deterioration of sovereign risk, to which bank risk is correlated, in some euro-zone countries (Italy); The growth slowdown and the flattening of the yield curve in the euro zone, wh en euro-zone banks ’ profitability has remained fairly low. Euro-zone banks are financially strong, but their return on equity is insufficient.