Banking markets across the world have become increasingly concentrated over the past few decades.
In large parts of the world, the idea of having a few very big banks is generally thought to be a good thing. The European Commission's competition regulators are busily trying to force banks to break up. Some people have even suggested 'bad' banking has contributed to the economic crisis.
What is your opinion about these claims? Is there any evidence to support them?
Should our big banks be broken up, or will having more banks in the market just make it a more dangerous place for everyone?
We have been discussing the importance of facts and using them to support our arguments. Look at the Economist Debate.
You must reference at least of the article listed in the background reading in your comment. Any comment that does not reference an article and explain how that quote supports their argument, will be deleted.(Remember to be objective and use the P.E.E. structure)
I think competition in banking have some positive.
ReplyDeleteMore competition can lead to a broadening of the customer base of the financial system, resulting in better diversification of risks.
“Competition in banking is not dangerous per se; it is the regulatory framework in which banks operate and which sets their risk-taking incentives that drives stability or fragility of banking.” Stated by THORSTEN BECK, 2011
The author means it can improve efficiency in banking and lead to higher deposit rates for savers and lower lending rates for borrowers. It can promote the development of new products, besides it can avoid risks of the bank, thereby make the individual welfare and economic development.
I agree with the point that the competition can make the banking more dangrous.
ReplyDelete"I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale." Thomas Jefferson,1805
In my opinion, now more and more intense competition in the banking industry, some Banks in order to get more benefit, with the name of fund for posterity to absorb deposits, while they use the money for risky investments, so that it produce more dangerous. And finally the victims are consumers.
I agree with Margaret and Manman.
ReplyDeleteOne of the benefits of competition can improve quality of service, so that consumers with less money to get better or more consumer and service. For the banks, improve their efficiency, have the best service, best service means service to the most simple, but the price can come down.
“Competition is not only the basis of protection to the consumer, but is the incentive to progress.”Herbert Hoover,2006
The benefit of competition is the emphasis on consumer business attitude, do everything possible to strengthen the management to improve quality, reduce costs, meet the needs of the community. China is basically the people's livelihood, especially in key areas and products are not open competition. Monopolist's argument that because it is important and can not let go, from the national perspective, not much benefit because the state monopoly. Monopoly only a few people, the industry benefit.
I agree with Margaret. I consider that there are lots of bank, which is a good thing. This situation will make more competition among these banks. That is helpful for the progress of the banking industry. If a bank want to have more customers, it must improve its system and the quality of services.
ReplyDelete“If all bank loans were paid...there would not be a dollar of coin or currency in circulation. Someone has to borrow every dollar we have in circulation. We are absolutely without a permanent money system.”
Stated by Robert W. Hemphill, 1950
The evidence can be seen that the banks play important roles in the economy market and the society. The market needs banks to adjust. There are a little of banks, which have less effect. To set up more banks, there are have a lot of choices and more effect.
I hold an opposite point with this claim. I think competition in banking is not dangerous per se.
ReplyDelete"Competition between a few large banks in a concentrated banking system can become fierce especially if they operate across the same markets and product differentiation is limited. Having a lot of small banks operating in different markets and across different products, on the other hand, will not foster competition."
Stated By Thorsten Beck,2011.
The wrriter described that the most reason that fierce competition between a few large banks exists is same markets and similar products.So competition will encourage banks to break new markets and develop new products.And it's beneficial for customers to chooose.Oppositely, If there are many small banks, and each one can be stable by occupying a specific market and having a few fixed products.It isn't good for this industry development.Above all, competiton is not dangerous for banking.
I agree with margaret. I think competition among of bank is helpful for their development. The banks which have more type of service and enough power and courage to innovate for customer services can survive, and the other banks which can not adept to this market competition will be eliminated. Where there is competition where there will be eliminated.
ReplyDeleteIt is not dangerous for competing among of bank.Competition can be a powerful source of useful innovation and efficiency, ultimately benefitting enterprises and households;competition can also foster stability through improved lending technologies; competition, however, can also endanger stability if mixed with the wrong kind of regulation.
Stated by Thorsten beck, 2011.
It can be clearly seen that cometition among banks will produce a positive repercussions for private sector development, individual welfare, and economic development. It also can foster efficiency in banking.
I think everything have two sides that positives and negatives. About this topic I think the positives are better than negatives. Beacuse just through competition will make the banking system perfect. Absolutely, in this process can appear some problems or lose but this is valuable.
ReplyDeleteCompetition is always a fantastic thing, and the computer industry is intensely competitive. Whether it's Google or Apple or free software, we've got some fantastic competitors and it keeps us on our toes.
Bill Gates 2001
This sentence show that competition is needed, and it is only through competition to develop with gradually.
I agree this opinion,competition makes Bank more dangerous.
ReplyDeleteIn this day,have more competition for every industry,such as Bank,The Bank did not want weed out.want customer investment,should them get more benefit.But the investment have more risk.The customer's interest will wnder average.
“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. Thomas Jefferson, (Attributed) 3rd president of US (1743 – 1826)
This comment has been removed by the author.
ReplyDeleteIn my opinion, I argue that competition may make banking less dangerous. Because if there are only a few big banks in a country when the financial crisis comes, which lead to the big banks bankrupt, the banding will be very hard to recover, even the country’s economy hence no money to support.
ReplyDelete“Supervisors and regulators almost everywhere are still trying to find ways to deal with banks that have become too big or too interconnected to be allowed to fail. If anything, the crisis has exacerbated this problem.” Stated by The Economist, May 12th 2011. The evidence seems to indicate that almost every country’s supervisors and regulators consider that too huge banks are easily to bankrupt, especially when the financial crisis happens. So it is believed that a phenomenon of only a few large banks in a country is more dangerous for the market and the country.
However, if a country positively promotes its banking with competition and much more and better supervision, the economy will be improved rapidly and the market will be more active. Thus, I think the competition is probably good for banking.
I agree with this claim.The big bank is not helpful for bank industry although it has enough power to guarantee customer's money to be safe.There is the evidence as follows:
ReplyDelete"Big banks have the advantage of scale, but it's not true to say that the bigger the better. The position of the best scale is in a area instead of on a spot. "
Stated by YU Liang-chun, GAO Bo
《China Industrial Economy》 2003-03
It is easy to see that the 'best one' is not 'largest one'.It is also can be said that the big bank maybe not the most suitable for economic markets.
Therefore,having a few very big bank can not be a good idea.
I donnot agree with this claims, sometimes I think competition doesnot make banking more dangerous.Personally, I believe that concentrated banks can pose systemic risks, and broaden the customer base of the financial system.
ReplyDelete"Competition in banking is not dangerous per se; it is the regulatory framework in which banks operate and which sets their risk-taking incentives that drives stability or fragility of banking." stated by Thorsten Beck,Professor of Economics and Chairman of the European Banking Center
I can consider that concentrate banks together can decrease diversification of risk, and it helpful for financial stability. Besides, it is good to the development of banks.
I Think the competition makes banking more dangerous.
ReplyDeleteFierce competition will make some big bank use their contacts to gain convenient. Then there are many corruption appeared. A lot of good products will be eliminated because they have not enough earnings.
"I believe that banking institutions are more dangerous to our liberties than standing armies." -Thomas Jefferson.
So we can see competition is not good for banking
I agree with Randy's opinion that the competion in banking is not so dangerous for banks. It will also cause some benefits for banking.
ReplyDelete"Competition in banking is not dangerous per se; it is the regulatory framework in which banks operate and which sets their risk-taking incentives that drives stability or fragility of banking." said by Thorsten Beck,2011.
The author's oponion shows that the competition will lead a improvement of the banks' services and products. The small bank could be alive in the market by their personal products.
All in all, the competition will lead the developing to the banks. It is not dangerous for banking.
I feel that my point of view differs from this motion. As some other people have mentioned, competition is not dangerous for banks but it needs Macro-regulation from government or relevent institution.
ReplyDeleteOne article published on Economist stated that if competition in banking leads to too much risk-taking, the right remedy is better supervision(Economist,June,2009).
Competition is argued to have resulted in bankrupt and depositor losing, however it is better for identifing the defects and reducing risks than the happending of serious and irreparable crisis.
As far as the damages caused by excessive competition, is thought that needs guidances from government and a system to allow to have proper competition under supervision.
In my opinion, competition is forever in business.But I think the competition must be have a rule, and it must be supervised by the government. And every bank should have an own system to control the competition. It can't destroy customer's benefit. For a example, banks can't charge services fees from customers.They should make money from invester. So I think competition is good, but it must be supervised.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteI think everything have two sides that positives and negatives. About this topic I think the positives are better than negatives. Beacuse just through competition will make the banking system perfect. Absolutely, in this process can appear some problems or lose but this is valuable.
ReplyDelete"Competition is always a fantastic thing, and the computer industry is intensely competitive. Whether it's Google or Apple or free software, we've got some fantastic competitors and it keeps us on our toes." (Bill Gates 2001)
This sentence show that competition is needed, and it is only through competition to develop with gradually.