There is a bit from an article I don't quite understand:

China has been eager to whip its brokers into shape. Officials want capital markets to lessen the burden on banks, which last year provided two-thirds of all new credit. The ten biggest Chinese banks have roughly 30 times more assets than the ten biggest securities firms, and are also far more profitable.

Part of the issue is the excessive use of phrasal verbs: "whip into shape" and "lessen the burden." Perhaps using more precise domain-specific terms would have helped here. Regardless, I don't understand the connection between the consolidation of brokers and new credit. To my knowledge, brokers can "lend" for buying and shorting securities, but not "lend" in the general sense like a bank might. So, to me, having big conglomerate brokers won't help the credit extension burden of banks since the business scope is still narrowly limited to the financial nexus (i.e. fund custody, market making, ect).


What theoretical or empirical findings could support the notion that consolidation in the securities services space could lead to a potential positive externality for banks?

For reference:



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