Bank Mergers are happening in the world economy in a rapid rate for the past few years. Obviously there are reasons behind this numerous bank mergers.
In the Banking Sector of any economy, the most crucial concern is the Risk Management. Banks of every country are supposed to make a proper risk analysis in order to balance the deposit and credit portfolios. Mergers can diversify these risks to a significant extent.
Drastic increase in market competition, innovation of new financial products and consolidation of regional financial systems and national financial systems are the other reasons, for which banks are going for mergers, around the world.
Merger can be proved really useful in fighting market competition, as merger has the capability to generate economies of scale. These Economies of scale can help the banks in lowering their servicing cost and in this way can provide a competitive edge to them.
Moreover, when Mergers happen, Transfer of Skills takes place between the two banking organizations and this transfer of skills lead to higher efficiency on the part of the merged bank.
Banking Sectors of every economy of the world are becoming global sooner or later. This globalization or economic liberalization has exerted a great impact on the Bank Mergers.
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