What is Your EOS? Created by m.moebs on 5/10/2022 5:32:50 PM
The economy of scale (EOS) is complex. Moebs $ervices has a patent pending on EOS.
Calculating a diseconomy of scale is the way to properly measure EOS.
This report explains EOS and shows a shadow EOS.
Comments always welcomed.
Economy of Scale (EOS) Dictates Financial Institution Performance
Lake Forest, IL (May 10, 2022) Every bank or thrift above $25 Billion in assets and every credit union above $10 Billion in assets is beyond the Economy of Scale (EOS), or in diseconomy of scale. This is the business level according to Adam Smith in the “Wealth of Nations,” costing more to service than produce a new $1 of business or in his terms 1 £ Sterling.
Yet, financial institutions (FIs) are incentivized to achieve diseconomy of scale with membership in the “Too Big To Fail” (TBTF) Club. The primary benefit of being TBTF is government will step in and save the FI from going under since each TBTF member could be a systematic risk causing national, economic panic or recession if it should fail. TBTF membership requires at least 1 million consumer checking accounts and/or an equivalent number of top 1,000 U.S. businesses. READ FULL ARTICLE