It follows that household heterogeneity can help to explain how the effects of monetary policy can be relatively large, due to the larger consumption response of the hand-tomouth group, even if the intertemporal substitution channel is weaker than in the representative agent framework.
Like banking, insurance underwriting is characterized by a broad size distribution of firms, from several large national insurers to much smaller local or technically specialized firms. Investment banking is more heavily concentrated, due to the greater geographic expanse of the markets for their services, and due to the considerable benefits of portfolio diversification.