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The following link looks at mega mergers in banking that have occurred in recent years, ( https://www.frbsf.org/economic-research/publications/economic-letter/2004/june/banking-consolidation/ ) , identifies the economic forces that are
The following link looks at mega mergers in banking that have occurred in recent years, ( https://www.frbsf.org/economic-research/publications/economic-letter/2004/june/banking-consolidation/ ) , identifies the economic forces that are motivating these mergers, and assesses their policy implications in the areas of antitrust, systemic risk, and "too big to fail" concerns.
- Define the following terms used in the reading:
- Riegle-Neal Act
- Gramm-Leach-Bliley Act
- FDIC Improvement Act
- systemic risk
- too big to fail
- How does the author define a large bank merger? Why did the number of these mergers increase beginning in 1997? In what other ways have large bank mergers changed in recent years?
- Distinguish between economies of scale and economies of scope in banking. What opportunities have regulatory changes in the 1990s created for banks to pursue these economies?
- How do mergers enhance banks? abilities to diversify risk?
- What does the author conclude from the evidence on stock market reactions to bank merger announcements?
- Have mergers reduced competition in banking at the local level? How about at the national level? How does the Riegle-Neal Act restrain the size of banks?
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