Technological and Regulatory Forces in the Developing Fusion of Financial-Services Competition

24 Pages Posted: 6 Mar 2007 Last revised: 12 Aug 2022

See all articles by Edward J. Kane

Edward J. Kane

Boston College - Department of Finance; National Bureau of Economic Research (NBER)

Date Written: March 1984

Abstract

Productlines of traditionally heterogeneous financial institutions are rapidly fusing into a homogeneous blend, institutions and market structures are reshaping themselves to lower the cost of serving customer demand for financial services.This paper contends that contemporary adaptations exploit scope economies rooted in technological change and deposit-insurance subsidies to innovative forms of risk-bearing. As they reorient work flows, financial firms are simultaneously restructuring their organizations to lower net burdens from government regulation. Alternative state and federal regulatory and legislative bodies compete vigorously for the regulatory business of developing institutional hybrids. Evolution of Federal Reserve policy toward "nonbank banks" exemplifies the process.

Suggested Citation

Kane, Edward J., Technological and Regulatory Forces in the Developing Fusion of Financial-Services Competition (March 1984). NBER Working Paper No. w1320, Available at SSRN: https://ssrn.com/abstract=968631

Edward J. Kane (Contact Author)

Boston College - Department of Finance ( email )

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