That's what happens when you centralize banking...
> Nah, it's just the nature of capitalism. Industries that require a large amount of startup capital lead to natural monopolies or duopolies.
But is that true of banking? The nation has a long history of small banks. While they've had their crises too, I don't think there's any natural motivation for bank consolidation besides using scale to eek out efficiencies and to gain power and influence.
Motivation has nothing to do with it. The development of power and influence through asymmetric growth in the industry is enough for this to emerge. There are still small banks today, but it's no coincidence that the largest (and thus overall best performing) banks cheat the system. The best performing become large and powerful on their own.
Capital is more than just money. It takes a lot to jump through the regulatory hoops, money requirements, and insurance costs while having competitive prices against other Banks and still make a profit.
Even if it was just a money issue, new banks do still require a fair amount of money for relatively little profit in an industry that is well established. If someone is going to put their capital on the line, why wouldn't they put it in a higher growth industry?
These don't make new bank creation impossible, just unlikely.
"It takes a lot to jump through the regulatory hoops, money requirements, and insurance costs while having competitive prices against other Banks and still make a profit."
And yet you still blame capitalism?
It happens. My parent's neighbor was involved in starting up a new small local bank a few years ago. Now they have three branches.
>I don't think there's any natural motivation for bank consolidation besides using scale to eek out efficiencies and to gain power and influence.
Are efficiencies and power-seeking somehow not enough? I mean let's look at Standard Oil. What did Rockefeller do other than eek out efficiencies and try to gain power and influence? Efficiences are what defines a natural monopoly, we can't just throw it out.
A good comparison might be shale oil companies, which largely are pretty small; Chesapeake, one of the most famous, has a market cap of 4.3B (so about the size of a tech unicorn). Shale oil companies, of course, are largely using oil and gas infrastructure built by years ago, so there isn't a competitive advantage keeping large companies afloat.
I think the parent is asking which of these examples banks are more like. Is there some sort of hidden infrastructure banks need to build before they're competitive—a total position database, or operating licenses in a bunch of markets, or an algorithmic trading platform—or can small banks largely compete with bigger banks? Like SO or CHK?
Another might be a "benefit corporation" which is a kind of entity that can be created in 30 states. I'm not aware of any state dissolution of corporations or shareholder lawsuits to enforce such articles of incorporation. But at least in theory, the reason why a corporation is "for profit" or "not for profit" is because it's in their articles of incorporation, so any other purpose for the corporation set out ought to be enforcible as long as it's not vague nonsense.
For example "make some people happy" might mean you can be an dick company, but if you make a really slick iphone app that people "like" then you've complied? This is something ethical startup founders would have to write into the articles of incorporation to bind future board of directors even once the founders aren't majority shareholders, is how I understand it.