That is, the protection from competition provided by interstate and intrastate barriers may have allowed some firms with market power to be inefficient or make uneconomic loans. Similarly, any improvement in competition and efficiency may increase the supply of credit to borrowers with positive net present value projects that inefficient lenders previously did not fund. In either of these cases, economic efficiency is improved.
As promised, the final issue I will discuss is that aspect of the modernization of financial markets in which financial service firms are likely to become more complex, providing more types of financial services within the same organization.