Question

Microeconomics 2:

The central bank of Malaysia (Bank Negara Malaysia) reassures banks to merge with other banking institution in order to bring about the economies of scale and to provide a higher level of efficiency. Subsequent to the mergers, there were only nine commercial banks left to form a completely new corporation.

Assuming that the above claim is valid, you are required to validate the statement with appropriate economic theory/concept.

Please write and draw the graph clearly :)

Answer 1

The above statement is true because merger and acquisition leads to cost synergies and consolidation of market which reduces overlapping resources and brings integration of units to reduce costs.

This leads to lower firms in the market due to consolidation and anticipation of cost synergies based on the horizontal integration concept where similar firms merge with each other.

PLEASE UPVOTE INCASE YOU LIKED THE ANSWER WILL BE ENCOURAGING FOR US THANKYOU VERY MUCH ALL THE BEST IN FUTURE