An idea whose time has come?

Discussions about whether to break up Sifis have hit the mainstream

david-rowe

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 introduces diseconomies of scale, for example making it much more difficult to maintain a single

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