--%>

Describe the wave of mergers in the banking industry

Describe the wave of mergers in the banking industry?
Many economic factors have caused banking institutions to merge over the past various years. What are these factors comprise Please explain breifly...

E

Expert

Verified

• Greater efficiency. Banks frequently are able to operate more cost efficiently by increasing their size. The costs of numerous functions don't double while the scale of operation doubles. Therefore mergers are one way to keep costs and prices down.

Leveraging technology. Banks & their customers have become accustomed increasingly to the advantages of new and costly technologies. Lots of technologies are too costly unless costs can be spread over a large number of customers. Mergers are frequently necessary to allow banks to introduce & maintain the technologies customers demand increasingly.

Changing laws. Laws which had prevented several banks from operating in more than one state recently have been eliminated or overridden. The advent of interstate banking and branching means more chance for banks operating in distinct states to merge with each other.

Diversification. One effective means of controlling risks inherent in bank lending is to diversify operations across distinct geographic regions and different kind of customers. Mergers can help diversify such risks.

Broader array of products. Mergers may give banking institutions chance to offer a broader array of services. A merger of two banks along with different expertise can result in a combination more to the liking of customers looking for one-stop shopping.

 

   Related Questions in Microeconomics

  • Q : Purpose of HMOs and PPOs Give the

    Give the answer of following question. The main purpose of HMOs and PPOs is to: A) reduce health care costs for employers and their employees. B) reduce medical malpractice suits. C) enable groups of physicians to increase their fees. D) direct patients to specialists

  • Q : Problem based on type of economy Tell

    Tell me the answer of this question. Economists would describe the U.S. automobile industry as: A) purely competitive. B) an oligopoly. C) monopolistically competitive. D) a pure monopoly.

  • Q : Prohibition in Pure Economic Profits

    Pure economic profits are NOT: (w) normal costs of production. (x) reduced to “normal” levels in long-run pure competition. (y) zero in long run monopolistic competition. (z) possible under pure competition in the short-run.

  • Q : World price in market When for wheat

    When for wheat the world price is $10 per bushel, and Del, who one owns the biggest wheat farm into North Dakota, will work at: (i) point a. (ii) point b. (iii) point c. (iv) point d. (v) point f.

    Q : Economically inefficient level of output

    A monopolist produces an economically inefficient level of output since: (i) the difference among marginal revenue [MR] and marginal costs [marginal costs [MC] is maximized. (ii) P > average total costs [ATC], therefore MSB < MSC. (iii) all cons

  • Q : Problem on Blacklisting The

    The Blacklisting was once common however now illegal in the labor market practice of: (i) Boycotting the products of firms whose workers are on strike. (ii) Forcing the workers to sign agreements not to join the unions. (iii) Paying the union officers to systematize u

  • Q : Expectations of price fall during sales

    Can someone help me in finding out the right answer from the given options. Pam’s expectations that the costs of shoes are going to drop all through forthcoming clearance sales will lead, in the short run, to a/an: (i) Reduction in her demand for shoes. (ii) Red

  • Q : Inelastic demand over relevant price

    While rate hikes will boost a utility's total revenue, in that case the utility faces: (w) elastic demand over the relevant price range. (x) unitarily elastic demand over the relevant price range. (y) inelastic demand over the relevant price range. (z

  • Q : Example of perfectly price inelastic A

    A candy factory now produced 5.2 million packages of gummy worms as well as sold them for $1.27 each this annum. Last year this sold 4.7 million packages of gummy worms sold for $1.36 each. That firm’s gummy worms have demand which is: (1) perfe

  • Q : Difference between planned and actual

    Differentiate between planned and actual saving and investment. Answer: There is a big difference between (a) planned S and I and (b) Actual saving and investment.<