A Banking Industry with a Large Number of Small Banks

question 31

Multiple Choice

A banking industry with a large number of small banks competing against each other in the market would be described as competitive. This type of market structure would

• A)encourage behavior beneficial to consumers.
• B)be characterized by inefficiencies and fewer benefits for the public.
• C)increase the likelihood of an individual bank failure because of the increased level of competition.
• D)Both a and c are correct.

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Definitions:

Scenario Analysis

A process of analyzing possible future events by considering alternative possible outcomes.

Competitive Analysis

The process of evaluating the strengths and weaknesses of competitors within the same market to develop strategic advantages.

What-if Analysis

A process or method used to evaluate the potential outcomes or impacts of different scenarios or decisions by changing variables and observing the resulting changes.

Base Case

The set of assumptions, inputs, and data considered in a financial model or analysis that serves as a starting point for scenario analysis.