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by bobabooey02 3293 days ago
> I don't think there's any natural motivation for bank consolidation besides using scale to eek out efficiencies and to gain power and influence.

Motivation has nothing to do with it. The development of power and influence through asymmetric growth in the industry is enough for this to emerge. There are still small banks today, but it's no coincidence that the largest (and thus overall best performing) banks cheat the system. The best performing become large and powerful on their own.
1 comments
Chaebixi 3293 days ago
But your assertion was that banking is an "industr[y] that require[s] a large amount of startup capital" such that it will "lead to natural monopolies or duopolies." The fact that you can have a small, profitable bank disproves that.
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bobabooey02 3293 days ago
Two things here:

Capital is more than just money. It takes a lot to jump through the regulatory hoops, money requirements, and insurance costs while having competitive prices against other Banks and still make a profit.

Even if it was just a money issue, new banks do still require a fair amount of money for relatively little profit in an industry that is well established. If someone is going to put their capital on the line, why wouldn't they put it in a higher growth industry?

These don't make new bank creation impossible, just unlikely.

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zo1 3293 days ago
In the same thread you state "Nah, it's just the nature of capitalism. Industries that require a large amount of startup capital lead to natural monopolies or duopolies" as the cause of centralization of the banks. Then you go on and explain where the high-capital cost actually comes from:

"It takes a lot to jump through the regulatory hoops, money requirements, and insurance costs while having competitive prices against other Banks and still make a profit."

And yet you still blame capitalism?

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bobabooey02 3293 days ago
I'm not blaming capitalism, just pointing out that in some industries, monopolies naturally form. If anything, I'm blaming the government for getting taken over by the rich instead of keeping the imbalances in line.
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Chaebixi 3293 days ago
> If someone is going to put their capital on the line, why wouldn't they put it in a higher growth industry?

It happens. My parent's neighbor was involved in starting up a new small local bank a few years ago. Now they have three branches.

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