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The Future of Large, Internationally Active Banks: Does Scale Define the Winners?

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TypeOfResource
Text
TitleInfo
Title
The Future of Large, Internationally Active Banks: Does Scale Define the Winners?
Name (type = personal)
NamePart (type = family)
Hughes
NamePart (type = given)
Joseph P.
Affiliation
Economics (New Brunswick), Rutgers University
Role
RoleTerm (authority = marcrt); (type = text)
author
Name (type = personal)
NamePart (type = family)
Mester
NamePart (type = given)
Loretta J.
Affiliation
Federal Reserve Bank of Cleveland
Role
RoleTerm (authority = marcrt); (type = text)
author
Name (authority = RutgersOrg-Department); (type = corporate)
NamePart
Economics (New Brunswick)
Name (authority = RutgersOrg-School); (type = corporate)
NamePart
School of Arts and Sciences (SAS) (New Brunswick)
Genre (authority = RULIB-FS)
Conference Paper or Lecture
Genre (authority = NISO JAV)
Accepted Manuscript (AM)
OriginInfo
Publisher
World Scientific
DateIssued (encoding = w3cdtf); (keyDate = yes); (qualifier = exact)
2015
Abstract (type = Abstract)
Our research as well as that by other authors has found scale economies at all sizes of banks and the largest scale economies at the largest banks – that is, larger banks are able to provide products at lower average cost than smaller banks. While the earlier literature found that scale economies are exhausted beyond a modest size – no larger than $100 billion and usually much smaller – a number of recent studies have found scale economies beyond this point, in fact, economies that increase with size. Based on a model that appropriately accounts for endogenous risk-taking and controls for any cost-of-funding advantages conferred on large banks, we find that technological factors, not advantages in funding costs, account for their scale economies. The literature does not indicate whether these benefits of larger size outweigh the potential costs in terms of systemic risk that large scale may impose on the financial system. However, if public policy considerations imply that society would be better off with smaller financial institutions, restrictions that limit the size of financial institutions, if effective, may put large banks at a competitive disadvantage in global markets where competitors are not similarly constrained. Moreover, size restrictions may not be effective since they work against market forces and create incentives for firms to avoid them. Avoiding the restrictions could thereby push risk-taking outside of the more regulated financial sector without necessarily reducing systemic risk. If such limits were imposed, intensive monitoring for such risks would be required. These factors need to be considered when evaluating policies concerning financial institution scale.
Language
LanguageTerm (authority = ISO 639-3:2007); (type = text)
English
PhysicalDescription
InternetMediaType
application/pdf
Extent
22 p.
Subject (authority = LCSH)
Topic
Banks and banking
Subject (authority = local)
Topic
Efficiency
Subject (authority = LCSH)
Topic
Economies of scale
Subject (authority = local)
Topic
Regulations
Subject (authority = LCSH)
Topic
Banking law
Extension
DescriptiveEvent
Type
Conference
AssociatedObject
Name
International Banking Conference (18th)
Type
Conference
Place
Chicago, IL
AssociatedEntity
Role
Sponsor
Name
Federal Reserve Bank of Chicago
AssociatedEntity
Role
Sponsor
Name
World Bank
DateTime (encoding = w3cdtf)
2015-11
Detail
The Future of Large, Internationally Active Banks
Extension
DescriptiveEvent
Type
Citation
DateTime (encoding = w3cdtf)
2015-11
Place
Chicago, IL
AssociatedObject
Type
Journal
Relationship
Has part
Name
International Banking Conference (18th)
Note
Prepared for the Eighteenth Annual International Banking Conference with the theme, "Conference on the Future of Large, Internationally Active Banks", organized by the Federal Reserve Bank of Chicago and the World Bank (Chicago, IL, November 2015). Session 1: The Cross-Border Banking Landscape, November 5, 2015.
RelatedItem (type = host)
TitleInfo
Title
Hughes, Joseph P.
Identifier (type = local)
rucore30199300001
Location
PhysicalLocation (authority = marcorg); (displayLabel = Rutgers, The State University of New Jersey)
NjNbRU
Identifier (type = doi)
doi:10.7282/T39W0HKP
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Copyright for scholarly resources published in RUcore is retained by the copyright holder. By virtue of its appearance in this open access medium, you are free to use this resource, with proper attribution, in educational and other non-commercial settings. Other uses, such as reproduction or republication, may require the permission of the copyright holder.
Copyright
Status
Copyright protected
Availability
Status
Open
Reason
Permission or license
RightsEvent
Type
Permission or license
AssociatedObject
Type
License
Name
Multiple author license v. 1
Detail
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RightsEvent
Type
Permission research
AssociatedEntity
Role
Librarian
Name
Rhonda Marker
Detail
After an embargo of 12 months, you may post the accepted author manuscript on your personal website, your institutional or subject repositories of your own choice or as stipulated by the Funding Agency. Please provide the following acknowledgement:

Electronic version of an article published as [Journal, Volume, Issue, Year, Pages] [Article DOI] © [copyright World Scientific Publishing Company] [Journal URL] --Cf. http://www.worldscientific.com/page/authors/author-rights
RightsEvent
Type
Embargo
DateTime (point = start); (encoding = w3cdtf)
2016-03-23
DateTime (point = end); (encoding = w3cdtf)
2018-12-01
Detail
Access to this PDF has been restricted due to the policy of the publisher, World Scientific, which requires a 12 month embargo from the date the paper was published, which is estimated to be December 2017. The work in this repository will be publicly available after December 1, 2018.
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Document
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