By Evan Abrams
European and
American banks frequently give business to other financial institutions as a
reward for referring business to bank or an inducement to do so in the future.
To some this is smart business practice but to others it seems highly
anticompetitive. According to the Wall
Street Journal, the U.K. Financial Conduct Authority has launched an
investigation into competitiveness among financial institutions, including the
practice of reciprocity. Reciprocity may also hurt shareholders by inflating
the number of banks working on any one project.
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