Financial intermediation is currently a subject of active research on both sides of the Atlantic. The integration of European financial markets raises questions concerning the risks to the banking system of increased competition, the appropriate regulation of banks and other financial intermediaries, and the emphasis that should be placed on Anglo-American as against Continental European forms of financial markets. The choice of the most appropriate financial system to promote economic growth is also central to Eastern Europe's transformation. In this volume, derived from a joint CEPR conference with the Fundacion Banco Bilbao Vizcaya (BBV) on 'Financial Intermediation in the Construction of Europe', held in San Sebastian on 27-28 March 1992, leading academics from Europe and North America review 'state-of-the-art' theories of banking and financial intermediation and discuss their policy implications. Individual chapters focus on bank-lending to companies, relationship banking, competition in banking, stock markets and banks, banking and corporate control, financial intermediation in Eastern Europe, monetary policy and the banking system, financial intermediation and growth, and bank regulation.