An idea whose time has come?
The merits of breaking up JP Morgan were widely discussed in early January, marking the topic’s shift to the mainstream of public discourse. David Rowe asks whether it is time to demerge the systemically important banks
In March 2009, I wrote a column entitled Systemic risk capital, where I pointed out that portfolio diversification tends to improve in the early stages of bank growth and that larger institutions can benefit from some operational economies of scale. I argued, however, that the marginal benefits from these sources tend to decline significantly beyond a certain size.
Furthermore, continued growth
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