EconPapers    
Economics at your fingertips  
 

Scale economies, cost complementarities and technical progress in Indian banking: evidence from fourier flexible functional form

Abhiman Das and Sangeeta Das

Applied Economics, 2007, vol. 39, issue 5, 565-580

Abstract: This article uses a multi-product Fourier flexible cost function specification to investigate scale economies, cost complementarities and technical progress of Indian banks during the post reform period 1992 to 2003. The empirical results indicate that there exist significant economies of scale for all size classes of banks and there is no evidence of diseconomies of scale, even for larger banks. In particular, for small and medium-size banks, there is enough opportunity to increase output by either increasing the scale or merging with other banks to improve the average cost curve. The evidence is fairly robust even after controlling the impact of asset quality and overall risk exposure in the cost function specification. In addition, the statistical test confirms that the industry cost function does not have a Translog form. The results do not find any empirical evidence of cost complementarities between outputs. In terms of technical progress, Indian banks have experienced significant cost reduction which is as high as 5% for the recent period. However, the effects due to the scale augmenting and nonneutral components are found to be negligible.

Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/00036840500428138 (text/html)
Access to full text is restricted to subscribers.

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:taf:applec:v:39:y:2007:i:5:p:565-580

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036840500428138

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

More articles in Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().

 
Page updated 2021-04-03
Handle: RePEc:taf:applec:v:39:y:2007:i:5:p:565-580