Risks increase while logic of conglomeration unfolds

The full process of conglomeration (increased opportunity to take risks leads to increaesed vulnerability to market swings, which begets crisis, which begets the next round of conglomeration and so on) unfolds slowly punctuated by acute crises.

RELATED ARTICLESExplain
The Global Financial Crisis
Long-term causes of the financial crisis?
Unintended consequences of earlier public policy choices
Investment banks incentivised to move into riskier activities
How were investment banks incentivised to increase risk?
Allowing mixing of commercial and investment banking in 1990s
Enabled commerical and investment banking conglomeration
Risks increase while logic of conglomeration unfolds
Advantages seen in Bank of America acquisition of Merrill Lynch
Model proven in Europe
Conglomeration enables diversification
Investment banks gain access to more stable source of funds
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