Given the size of the largest banks’ balance sheets, even a relatively small advantage in the funding spread means a big hidden flow of subsidy from the taxpayers to those banks.7 Recent research suggests that the increasing returns to scale in banking, beyond a certain size range, may largely result from the cheaper funding costs of the presumedly too-big-tofail banks.8 An interesting aspect of the research is also that the social cost of too-big-to-fail banks, due to increased systemic risk, appears to be significantly higher than the benefits from the economies of scale.9 However, not only the size of the financial sector and that of the banks is important, but also what the sector actually does.
Again, thank you to all our partners and to all others with us today who share our commitment to economic and financial literacy programs. BIS Review 37/2007  1  Together, let us help Filipinos manage their personal finances well, transform them into net savers and help them identify options that can ultimately lead to wealth creation. Maraming salamat po sa inyong lahat!