Technological Change in Large U.S. Commercial Banks

William C Hunter and Stephen G Timme

The Journal of Business, 1991, vol. 64, issue 3, 339-62

Abstract: 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 one percent per year, increased the cost-minimizing scale of outputs, and affected product mix. The authors 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. Copyright 1991 by University of Chicago Press.

Date: 1991
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