Mega Banks vs. Community Banks - Essay Example

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Mega Banks vs. Community Banks

They play a crucial role in development of economy across length and breadth of the US. They remain very important in small-business sector and agricultural lending. The paper aims to explore the contrasting roles played by Community banks and large banks in the national economy and the regulatory burden that “Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010” is likely to put on them impacting their performance in the national economy. Small Business Lending Small businesses account for a huge share of total economic output and employment. Small business with fewer than 500 employees, account for more than 50 percent of private sector employment and output. Community banks are better placed in making loans to small businesses. Small bank officials can review the small business loan applications taking local perspectives and the nature of business. That is usually not possible for large banks as they do not have so much autonomy at local levels and it is not feasible for the large banks to review the myriads of small business applications that closely. Another advantage with community banks to deal with small business loans is that often it is required to maintain a close relationship with the borrower. ...Show more

Summary

Mega Banks vs. Community Banks Introduction The US banking system is bifurcated into mega banks and small community banks across most part of the country and this structure has served the country well. Large banks rely more on computer models and hard financial information to make the decisions that are mostly taken in their central locations…
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