Expansion strategies of banks: does size matter?

Luiz Fernando de Paula ()

Nova Economia, 2002, vol. 12, issue 2, 133-146

Abstract: This paper discusses whether there is some evidence in recent literature that banks do obtain economies of scale and scope when they expand their activities, mainly by mergers and acquisitions (M&As). In this connection, this paper shows that, although there is no clear evidence that such economies have been reached by the banks, the final cost-benefit balance of M&As extracted from literature seems to favour the more universal financial franchise. However, these results are neither unequivocal nor asserted a priori. Indeed, M&As can be desirable for banks if the former are expected to increase profits independently of the effect they may have on the latter's operational efficiency.

Keywords: banks; economies of scale; economies of scope; mergers and acquisitions (search for similar items in EconPapers)
JEL-codes: G21 L10 (search for similar items in EconPapers)
Date: 2002
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