Banking Industry: Structure and Competition - Competition and Bank Consolidation
3 important questions on Banking Industry: Structure and Competition - Competition and Bank Consolidation
What are the 3 phases of deregulation and competition?
1. Removal of quantitative barriers to growth in banking (restrictions on bank lending)-> increase in bank assets (restrictions had decreased) profits of banks were increasing
2. Increase in competition from new entrants from overseas, non-bank financial institutions, non-financial institutions -> profits were decreasing -> increase in Shadow banking
3. Growth of non-traditional businesses (revenu from off-balance-sheet activities: financial market trading, derivatives, securitization) -> increase in profit
2. Increase in competition from new entrants from overseas, non-bank financial institutions, non-financial institutions -> profits were decreasing -> increase in Shadow banking
3. Growth of non-traditional businesses (revenu from off-balance-sheet activities: financial market trading, derivatives, securitization) -> increase in profit
What is NIM (net interest margin)?
Measure earning of intermediation, Average spread
What did the Reduce in costs and improve profitability to survive lead to?
• M&A
• Branch closure and personnel contraction
• Technology
--> number of banks decreased dreasticly
• Branch closure and personnel contraction
• Technology
--> number of banks decreased dreasticly
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