--%>

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 : Labor-Leisure Tradeoffs When leisure is

    When leisure is a normal good, then the demand for leisure: (i) Differs directly with the income. (ii) Has declined sharply as World War II. (iii) Is positively associated to the average age of population. (iii) Shifts left-ward as an outcome of technological advances

  • Q : Tourist’s use of natural resources What

    What are your views about tourist’s use of natural resources?

  • Q : Determine supply curve as perfectly

    Suppose that all these given demonstrated curves in below are infinitely long straight lines. There supply curve that is perfectly price-inelastic is: (i) supply curve S1. (ii) supply curve S2. (iii) supply curve S3. (

  • Q : Analytic Time-Short Run I have a

    I have a problem in economics on Analytic Time-The Short Run. Please help me in the following question. In short run: (1) At least one resource is fixed. (2) Firms can enter or exit the industry. (3) Economies of the scale are present. (4) Total fixed cost rises with

  • Q : Determine marginal revenue and marginal

    While this firm maximizes economic profits, in that case marginal revenue and marginal costs would be: (1) $4 per unit. (2) $6 per unit. (3) $8 per unit. (4) $10 per unit. (5) $12 per unit.

  • Q : Demand when total revenue uninfluenced

    When total revenue to a firm is uninfluenced by small price changes, in that case demand is: (1) relatively price elastic. (2) relatively price inelastic. (3) unitarily price elastic. (4) vertical. (5) horizontal.

  • Q : Best statement of association between

    Which of the given is the best statement of the association between macroeconomics and microeconomics: (w) Macroeconomics and microeconomics deal along with totally independent types of problems. (x) A clear line splits microeconomic questions from ma

  • Q : Shut Down Point of monopolist A

    A monopolist will shut down within the short run while its equilibrium price as: (1) equals short-run average cost. (2) exceeds marginal cost. (3) is less than average variable cost. (4) is less than average fixed cost.

  • Q : Problem on competitive equilibrium

    The economy consists of an equal number of smokers (S-types) and asthma sufferers (A-types). Good 1 is cigarettes, good 2 is “other stuff.” S-types have the utility function: xS1 + xS

  • Q : Natural barriers to entry in network

    Assume that an equipment or software firm has copyrights and patents which restrict other firms from producing goods embodying its technology, and which the firm is shielded from competition since customers can deal along with each other at lower costs when they utili