Question

Are bank consolidations a good thing? Discuss the pros and cons of bank consolidations. Your answers should use economic logic.

Answer 1

Bank consideration means that there would be e combination of various banks into one large entity or it can also be said that there would be a consolidation and Merger of various banks into one single Bank in order to expand and grow.

Advantages of bank consolidation are as follows-

A. It helps in formulation of synergies

B. It will also help in growth and expansion of the larger entity into a more bigger one.

C. It will also lead to generation of more credit flow into the entire economy and helpful in better regulation by monetary policies of Central Bank.

D.It will also help in decreasing the cost of the overall operations.

Disadvantages of bank consolidation as follows-

A. acquiring bank will have to deal the burden of the weaker Bank.

B.it is difficult to manage the culture of various different banks at one place together.

C.merger will also destroy the idea of the decentralization and catering to a large group of customers who are mostly regional customers.