A discussion of potential problems inherent in the practice of offering numerous and diverse services or products in banking; possible adverse impacts from wider service lines; the relationships of these impacts to market structure conditions; and the possible efficacy of antitrust enforcement. Reciprocal arrangements present a serious problem. This practice promotes market power, heightened by credit-rationing, and, despite current legal remedies against it, is hard to detect. Distortions in the credit mechanism appear somewhat easier to prevent by regulating the bank-holding companies. Banking service expansion can affect competitiveness of both banking and nonbanking markets, if a significant number of banks in a market expand. Solutions lie in regulation of corporate forms and expanded services; antitrust authorities must make an important contribution. Even so, some increased competitive problems will remain as the price for advantages of wider banking service. 26 pp. (SM)
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