An empirical analysis of scale and scope economies and technical change in an Irish multiproduct banking firm

In contrast to most empirical investigations of the efficiency of multiproduct financial institutions, which either estimate scale and scope economies with a given state of technology, or only analyse technical change in the presence of overall scale economies, this study estimates overall scale eco...

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Bibliographic Details
Published in:Journal of banking & finance 1992-04, Vol.16 (2), p.423-437
Main Authors: Glass, J.C., McKillop, D.G.
Format: Article
Language:English
Subjects:
Banking industry
Banks
Diseconomies
Economies of scale
Financial services
Ireland
Mathematical models
Studies
Technological change
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Summary:In contrast to most empirical investigations of the efficiency of multiproduct financial institutions, which either estimate scale and scope economies with a given state of technology, or only analyse technical change in the presence of overall scale economies, this study estimates overall scale economies, product-specific scale economies and scope economies in the presence of both neutral and non-neutral technical change. Also, in contrast to most other empirical studies in this area, standard errors are computed for all relevant statistics. The findings indicate diseconomies of scope; overall diseconomies of scale; product-specific economies are decreasing for investments and increasing for loans; in addition to substantial neutral technical change, biased technical change is labour- and capital-saving and deposits-using in character.
ISSN:0378-4266
1872-6372
DOI:10.1016/0378-4266(92)90023-S