According to the <em>"Not Too Big Enough" </em>article, some of the <em>sources of </em><em>scale economies</em><em> in the banking and finance industry</em> are as follows:
1. Bigger banks can spread their investment (fixed) costs over more output, thereby <em>reducing the </em><em>cost per unit </em><em>and making it impossible for </em><em>smaller banks </em><em>to compete in the market</em>. Most often, the smaller banks cannot afford investments in modern banking computing power and systems management.
2. Bigger banks can <em>consolidate banking functions</em> with the <em>elimination of redundancies </em>after each merger and acquisition. The cost of redundancies also gives them economies of scale.
3. Bigger banks have access to <em>larger pools of </em>deposits and will not engage in borrowing at higher costs. Smaller banks cannot tow this line because of their small scale, lacking the required funding mix.
4. Finally, advertising works best where a bank has a large geographic spread. The cost of advertising over a large area is worth it, unlike when a small bank markets its services by advertising.
2. These economies of scale mean that Oligopolies are increasing on Wall Street, and there will be further consolidations of smaller banks. Of course, every small bank would like to engage in mergers and acquisitions to grab a share of the scale economies.
Thus, <em>as banks grow large</em>, they should be mindful that enjoying the scale economies comes with the risk of crumbling like the banks regarded as <em>"too big to fail" </em>when they build on a pack of cards.
Learn more: brainly.com/question/3156270
<u>Answer: </u>Prime rate
<u>Explanation:</u>
Prime rate is the rate of interest charged by the commercial banks to their creditworthy customers for short term loans. These customers are usually big corporations involved in business. RRR is the required reserved ratio which the deposits that banks must keep in hand.
Federal funds rate is the charges that banks impose on other banks for borrowing. Federal fund rate is used in the calculation of the prime rate. Money multiplier formula means the bank uses to calculate the new money inflow through demand deposits.
Before. Approval for payments should always take place before those payments are made. Imagine if you took your parents credit card and didn't ask for permission until after you spent money online.
Answer:
1st & 3rd are False, 2nd is True .
Explanation:
Price Discrimination is pricing strategy - involving firms charging different prices from different customers, for same goods & services.
If demand curves of different markets (customer groups) are different it is profitable for firms to do price discrimination - i.e selling at different prices, rather than single price. This enables firm charging maximum of their paying capacity from each customer group. Hence 1st statement is False
Markets having customers with more elastic (more price sensitive) demand should be charged lower prices. Markets having customers with less elastic (less price sensitive) demand should be charged higher prices. So, 2nd statement is True.
Arbitrage is ability of buying goods from low priced markets, selling them in high priced markets. In presence of arbitrage, it is difficult for firms to discriminate. So, 3rd statement is False.
Answer:
All of the above
Explanation:
Section 11 of the security act of 1933 states that whenever the registration statement becomes effective , the accountant will be liable for errors relating to untrue statement of material fact , omission of a required material act or the inclusion of any other misleading information.
The aim is to ensure that the statement is truthful enough to supply reliable information that will protect the interest of stakeholders and fraud in the sales of securities.
