Information technology and financial services consolidation

Article Abstract:

The consolidation of the financial services industry presents significant implications for information technology. Most firms are partly attributing their decision to merge to their hopes of achieving cost savings in information technology expenses. One curious aspect of this trend is the decision of merging financial institutions to keep their information technology in-house rather than outsourcing it, which can be possibly explained by their desire to retain the strategic opportunity for more diversification to be able to offer both financial and information services in the future. Thus, the distinction between financial and information services firms is blurring as a result of consolidation.

Financial Services, Finance and Insurance, Acquisitions & Mergers Analysis, Information Systems, Management, Mergers, acquisitions and divestments, Financial services industry, Acquisitions and mergers, Information technology, Financial institutions, Financial analysis

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Comment on Trester

Article Abstract:

The restriction of foreclosure options to entrepreneurs with debt, rather than stock preferences, creates inaccuracies on Jeffrey J. Tester's venture capital research. Although the presence of asymmetric information in Tester's study may be valid, the assumption that foreclosure options tend to create ex post inefficiencies is highly refutable. Business owners are only induced to develop opportunistic behavior if the amount of future pay off and cash flow are both limited. Otherwise, owners may be compelled to seek a second round of investment with venture capitalists.

Debt & Capital Management, Research, Finance, Small business, Venture capital, Financial management, Cash flow

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Banking deregulation: allocational consequences of relaxing entry barriers

Article Abstract:

The effects of US banking deregulation that lowers entry barriers is assessed using a spatial model which differentiates banks on its deposits and loans. Results show that loan interest rates are inversely related to competition which is advantageous for borrowers and depositors but not for bank shareholders. This implies a future move to consolidation to lessen the number of banks and thus lessen competition.

Regulation misc. commercial sectors, National commercial banks, Banking industry, Competition (Economics), Economic aspects, Interest rates, Deregulation

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