Transformation of Banks and Bank Services

This paper analyzes the transformation of banks driven by innovations in financial products and in information technology, the liberalization of financial markets, and changes in bank regulation. A bank faces various strategic choices including its positioning in the life cycle of financial products...

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Bibliographic Details
Published in:Journal of institutional and theoretical economics 1998-03, Vol.154 (1), p.109-133
Main Author: Franke, Günter
Format: Article
Language:English
Subjects:
Bank earnings
Bank loans
Bank markets
Bank operations
Banking
Banking regulation
Banking services
Banking system
Banks
Capital market
Customers
Economic change
Financial institutions
Financial services
Information technology
Investment banking
Liberalization
Regulation
Retail banking
Swiss banks
Technological change
Technological innovation
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Summary:This paper analyzes the transformation of banks driven by innovations in financial products and in information technology, the liberalization of financial markets, and changes in bank regulation. A bank faces various strategic choices including its positioning in the life cycle of financial products and the range of products to be supplied. A peculiarity of the life cycle of a financial product is its démystification, characterized by its unbundling and private bundling of customers, and the marketization, characterized by the development of liquid and efficient markets for product components. Diversity in bank strategies is explained by differences in exogenous factors and in banks' abilities to manage demand-side economies and supply-side diseconomies of scope.
ISSN:0932-4569