The Federal Reserve Bank of New York works to promote sound and well-functioning financial systems and markets through its provision of industry and payment services, advancement of infrastructure reform in key markets and training and educational support to international institutions.
Regional & Community Outreach connects the Bank to Main Street via structured dialogues and two-way conversations on small business, mortgages, and household credit.
Economic Education improves public knowledge about the Federal Reserve System, monetary policy implementation, and promoting financial stability through the Museum and programs for K-16 students and educators, and the community.
The Consolidation of the Financial Services Industry
Consolidation has changed the nature of the financial services industry. Large multipurpose financial companies now offer retail customers not only traditional deposit and lending services but mutual fund, insurance, and brokerage services. For their corporate clients, these same companies offer lines of credit as well as payments, risk management, and securities underwriting services. In the past, U.S. banks were restricted from providing all of these services, but recent regulatory and court decisions have allowed them to expand their activities. More generally, globalization continues to increase the pressure for uniform legal and regulatory treatment across national boundaries. These developments raise several important questions: Why has the financial services industry experienced consolidation? Are banks and other financial services providers more efficient as a consequence? Has globalization of financial markets enhanced competitiveness? Will consolidation change the role of the central bank? Will small businesses and small depositors get lost in the shuffle?
At the Conference on the Consolidation of the Financial Services Industry, leading researchers from the academic community, regulatory agencies, and the financial services industry explored these and other questions. Our hope is that rigorous research subjected to thorough review will provide answers and suggest appropriate actions for policymakers. Proceedings of the conference will be published in a special issue of the Journal of Banking and Finance edited by Allen N. Berger of the Board of Governors of the Federal Reserve System and Rebecca S. Demsetz and Philip E. Strahan, both of the Federal Reserve Bank of New York.
William J. McDonough
Federal Reserve Bank of New York
SESSION 1: PERSPECTIVES ON BANK CONSOLIDATION
Chair: Paul B. Bennett Federal Reserve Bank of New York
"Megamergers and Expanded Scope: Theories of Bank Size and Activity Diversity"