Size Matters in Banking, and Big is Worse
Columbia University finance professor Charles Calomiris makes a case in yesterday’s WSJ about why the world needs giant banks. “There are sizable gains from retaining large, complex, global financial institutions,” says Calomiris, an economist and the former co-director of the American Enterprise Institute’s “Financial Deregulation Project.” His arguments can be summarized as follows: Big banks must operate globally to meet the needs of their increasingly vast corporate clientele Huge financial companies provide economies of scale, such as offering a wide range of services, benefiting the financial system and consumers as a whole Global financial institutions help developing market economies by extending them credit Big banks enable global trade by knitting together stock, bond and other markets Let’s examine these claims…
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