Technological Change in Large U.S. Commercial Banks

This article examines technological change, its relationship to firm size, and its impact on the efficient scale of output and product mix for large U.S. commercial banks. The results suggest that technological change lowered real costs by about 1.0% per year, increased the cost-minimizing scale of...

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Bibliographic Details
Published in:The Journal of business (Chicago, Ill.) Ill.), 1991-07, Vol.64 (3), p.339-362
Main Authors: Hunter, William C., Timme, Stephen G.
Format: Article
Language:English
Subjects:
Automation History
Bank loans
Banking
Banking industry
Banking regulation
Banks
Commercial banks
Comparative studies
Cost estimates
Cost functions
Economic models
Economic theory
Economies of scale
Impacts
Product mixes
Productivity
Size of enterprise
Statistical analysis
Technological change
Technological innovation
Technology
U.S.A
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Summary:This article examines technological change, its relationship to firm size, and its impact on the efficient scale of output and product mix for large U.S. commercial banks. The results suggest that technological change lowered real costs by about 1.0% per year, increased the cost-minimizing scale of outputs, and affected product mix. We do not find support for the Galbraith-Schumpeter hypothesis. This suggests that the largest banks cannot use innovation alone to outpace smaller banks. The major implications are that public policies allowing freer banking combinations do not necessarily run counter to the public interest.
ISSN:0021-9398
1537-5374
DOI:10.1086/296541