It depends on their business strategies, their management and the environment in which they operate. Size does increase the complexity of administration, although new technology and better management systems can mitigate these difficulties. Some banks have grown so large that their failure may trigger a systemic crisis of global proportions. They may believe their governments and regulators will not allow them to go under. This may encourage them to take greater risks than they should.
Regulators have a difficult task to guard against moral hazard.
They need to monitor risk profiles and take action before a mega-bank s risk becomes too large. Financial Times Business Ltd. All rights reserved.