Financial consolidation: dangers and opportunities
Article Abstract:
The rapid consolidation of banks and other financial institutions presents both opportunities and risks for the industry. On one hand, bank mergers and the advent of nationwide banking could result in more diversified loan portfolios that reduce the likelihood of bank failures. The diversification of the industry also opens up opportunities for reform of the banking sector since broad-based deposit insurance is rendered less necessary and the political forces supporting it is weakened. On the other hand, consolidation erodes the Glass-Steagall restrictions that prevent banks from getting involved in investment banking and other activities. Consolidation also raises the possibility of moral hazard and an increase in size of many financial services firms.
Publication Name: Journal of Banking & Finance
Subject: Business
ISSN: 0378-4266
Year: 1999
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The new architecture of financial intermediation
Article Abstract:
The accelerating trend towards consolidation in the banking industry is paving the way for a dramatic transformation of American financial intermediation. The merger and acquisition frenzy began in the mid-1980s when interstate banking restrictions were relaxed. The trend further intensified in the 1990s when banks and investors began to realize the value of combining revenue streams on a smaller expense based as a means for stimulating earnings growth. Transactions such as Banc One's acquisition of First USA and Dean Witter Discover's merger with an upscale investment banking franchise are eliminating the boundaries between banking and financial services. This could eventually result in the long-awaited creation of hybrid intermediaries.
Publication Name: Banking Strategies
Subject: Business
ISSN: 1091-6385
Year: 1997
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The consolidation of the financial services industry: causes, consequences, and implications for the future
Article Abstract:
Financial institutions around the globe are initiating mergers and acquisitions in a frantic effort to maximize shareholder value, a trend which could have far-reaching consequences and implications for the international financial system. The consolidation of the financial services industry is being driven by technological innovations, international consolidation of markets, improvements in financial condition, excess capacity or financial distress in the market and deregulation of geographical or product restrictions. While consolidation may bring about improved efficiency and increased market power, it could also undermine the efficiency of the payment system and the availability of financial services to small customers.
Publication Name: Journal of Banking & Finance
Subject: Business
ISSN: 0378-4266
Year: 1999
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