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Informational scope economies provide a cost advantage to universal banks o¡ering ''one-stop shopping'' for lending and underwriting that enables them to ''lock in'' their clients' subsequent business. This market power reduces universal banks' incentive, relative to that of specialized investment banks, to apply costly underwriting e¡orts; consequently, universal banks are less successful in selling their clients' securities. Our results suggest that an integrated ¢nancial services market is less innovative than one with specialized intermediaries. Our analysis also identi¢es economy, intermediary, and ¢rm characteristics that motivate either the integration or segmentation of bank lending and underwriting.

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