Question
The city of Puni has 10 banks of various sizes. Bank A has 18 percent of all Puni's deposits, bank B has 15 percent, bank
The city of Puni has 10 banks of various sizes. Bank A has 18 percent of all Puni's deposits, bank B has 15 percent, bank C has 12 percent, bank D has 10 percent, the next five banks have 8 percent each, and the smallest bank has 5 percent. Suppose that banks A and D propose a merger at the same time that banks B and C propose a merger. You, as the banking structure analyst at the Federal Reserve, must analyze the competitive situation and determine whether either or both of the mergers should be allowed. Write up your analysis as a recommendation to the Federal Reserve Board, which will use your analysis to make a decision. Be sure that your answer includes the numerical considerations relevant to the case.
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