According to economic theory involving economies of scale, larger and more cost-efficient FIs should prevail over smaller, less cost-efficient FIs.

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Economies of scale suggest that larger institutions benefit from lower per-unit costs, allowing them to outcompete smaller institutions that cannot achieve the same level of cost-efficiency. This is often seen in banking, where larger banks can offer lower fees and interest rates due to cost savings from their size and scope of operations.

According to Economic Theory Involving Economies of Scale, Larger and More