Scale and skills in European active management: Impact of a new regulatory context

Veasna Khim and Hery Razafitombo

Journal of Banking & Finance, 2023, vol. 154, issue C

Abstract: This study examines the impact of a new regulatory context on the dynamics and nature of returns to scale in European active management. Using a sample of 1325 actively managed European equity funds and following Pastor, Stambaugh, and Taylor’s model from 2015, we find strong evidence of industry-level decreasing returns to scale. We also find that the new regulatory context creates structural breaks in the optimal scale that significantly change the size-performance relationship. We find strong support that emerging and small-cap funds allow increasing returns to scale. We find evidence that fund families play a moderating role in decreasing returns to scale. Further, the results show a significant upward trend in fund skills evolution.

Keywords: Fund scale; European mutual funds; Fund skills; Performance evaluation (search for similar items in EconPapers)
JEL-codes: G11 G15 G18 G23 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0378426623001553
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:154:y:2023:i:c:s0378426623001553

DOI: 10.1016/j.jbankfin.2023.106963

Access Statistics for this article

Journal of Banking & Finance is currently edited by Ike Mathur

More articles in Journal of Banking & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().