TBTF As A Motive For Bank Mergers
- IJLLR Journal
- May 5
- 1 min read
Samridhi Pal, Amity Institute of Advanced Legal Studies, Amity University, Noida
ABSTRACT
The notion of “Too Big to Fail” (TBTF) has been essential in shaping the landscape of the banking sector, particularly as a motive for bank mergers. This concept came to the fore with the advent of the financial catastrophe of 2008. TBTF institutions were at the heart of the crises. Banks pursue M&A not only for economies of scale, competitive advantages but also for achieving the TBTF status. TBTF doctrine influences financial institutions’ strategic decisions, driving consolidation efforts to achieve size and systematic importance. However, at the same time, TBTF banks and financial institutions has it’s own associated risks and problems like creation of moral hazard, systematic risks etc which pose significant challenges to financial stability of an economy especially during a financial crises. Hence, it is not incorrect to state that TBTF is a blend of both positive and negative aspects, when studied as a motive for bank mergers.
Keywords: TBTF; Too Big to Fail; M&A; Banks; Financial institutions; Motive; Crises
