Economic Cost, Scale Efficiency, and Competitive Viability in Banking

Jeffrey A Clark

Journal of Money, Credit and Banking, 1996, vol. 28, issue 3, pages 342-64

Abstract: This paper addresses the issue of the competitive viability of banks of different scales and scopes of operation and the implications that this may have for the evolving structure of the banking and financial services industry. Unlike previous papers, this paper is the first to include both production and opportunity costs in an empirical evaluation of bank efficiency. No consistent evidence is reported to suggest that banking organizations can achieve further gains in either production or economic efficiency by expanding beyond $2 billion dollars of total assets. Thus it is likely that smaller, less diversified banking organizations will remain competitively viable. Copyright 1996 by Ohio State University Press.

Date: 1996
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Persistent link: http://EconPapers.repec.org/RePEc:mcb:jmoncb:v:28:y:1996:i:3:p:342-64

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