Impact of Emerging Financial Holding Company Model on Small Business B

Banking market structure is rapidly changing and regulators demand big things by trying to make banks diversify into non banking business activities. Diversifying banks reap the economies of large scope, and can easily access funds on capital market. Yet, the short and long-run consequences of bank diversification remain highly unknown and debatable. In the end, such ignorance risks the overall welfare of the consumers of banking products. Diversification from banking perspective entails drifting into non-banking businesses through for an example acquisition-a model called bank conglomeration. In most emerging economies, the model is trending and the prevalent belief is that when banks diversify or conglomerate, they got shielded from potential financial distress threat, which in turn protect investors. All things being equal, this can be achieved, but while this banking model could increase shareholders¿ value, they appear likely to be short-circuited by the policy makers as they fear that they may grow to be ¿Too Big To Fall¿.