It seems clear, from a structural perspective, that a broad array of financial serv�ices firms may perform one or more of the roles identified in Exhibit 2.1—commer�cial banks, savings banks, postal savings institutions, savings cooperatives, creditunions, securities firms (e.g., full-service firms and various kinds of specialists), mu�tual funds, insurance companies, finance companies, finance subsidiaries of indus�trial companies, 信托人 and others. Members of each strategic group compete with each
other, as well as with members of other strategic groups. Assuming it is allowed to
do so, each organization elects to operate in one or more of the financial channels according to its own competitive advantages. Institutional evolution therefore de�pends on how these comparative advantages evolve, and whether regulation permitsthem to drive institutional structure. In some countries, commercial banks, for ex�ample, have had to “go with the flow” and develop competitive asset management,
origination, advisory, trading, and risk management capabilities under constant pres�sure from other banks and, most intensively, from other types of financial services
firms.
Take the United States as a case in point. With financial intermediation distorted
by regulation—notably the Glass-Steagall provisions of the Banking Act of 1933—
banks half a century ago dominated classic banking functions, broker-dealers domi�nated capital market services, and insurance companies dominated most of the
generic risk management functions, as shown in Exhibit 2.10. Cross-penetration
among different types of financial intermediaries existed mainly in savings products.
Some 50 years later this functional segmentation had changed almost beyond
recognition despite the fact that full dejure deregulation was not implemented until
the end of the period with the Gramm-Leach-Bliley Act of 1999. Exhibit 2.11 shows
a virtual doubling of strategic groups competing for the various financial intermedi�ation functions. Today, there is vigorous cross-penetration among them in the United
States. Most financial services can be obtained in one form or another from virtually
every strategic group, each of which is, in turn, involved in a broad array of financial
intermediation services. If cross-competition among strategic groups promotes both
static and dynamic efficiencies, then the evolutionary path of the U.S. financial struc�ture probably served macroeconomic objectives—particularly growth and economic
restructuring—very well indeed. And line-of-business limits in force since 1933 have
probably contributed, as an unintended consequence, to a much more heterogeneous
financial system—certainly more heterogeneous than existed in the United States of
the 1920s or in most other countries today. This structural evolution has been ac�companied in recent years by higher concentration ratios in various types of financial
services, although not in retail banking, wherein concentration ratios have actually
fallen. None of these concentrations are yet troublesome in terms of antitrust con�cerns, and markets remain vigorously competitive.
