As a rule, big banks have – lower unit costs because fixed costs (capacity costs) are spread over a larger output volume, – better utilization of supply capacities, – more prudent risk management because specialized staff can assess individual credit risks in particular, and – they can refinance themselves more cheaply. For this reason, large banks are able to grant cheaper loans than smaller institutions. – Above a certain size, however, these advantages increasingly dwindle; the management of business becomes cumbersome and confusing; schematic procedures increasingly determine business conduct, contact with the customer on the spot is lost, and the susceptibility to a crash increases. – See actuary, bank size, optimal, assertion strategy, downsizing, Gibrat rule, gigabank, size confidence, G-Sifi, megamania, multi-boutique approach, Penrose theorem, feedback mechanism, subsidiarity principle, too big to save principle. – Cf. 2010 Annual Report of BaFin, p. 123 f. (previous crediting benefits for large inter-institutional exposures no longer apply).
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