The Effect of Economies of Scope on Iranian Banking Sector Structure: An Application of Multi-Product Function and Multi-Level Effect Approaches

Mahmodpour Kamran (), Mohammad Shahiki Tash and Fotros Mohammad Hassan ()
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Mahmodpour Kamran: Department of Economics, Bandar Abbas Branch, Islamic Azad University, Bandar Abbas, Iran
Fotros Mohammad Hassan: Bu-Ali Sina University, Hamedan, Iran

Scientific Annals of Economics and Business, 2018, vol. 65, issue 4, 459-475

Abstract: This paper investigates, using a multi-product paradigm, the market structure of the Iranian banking sector to evaluate the role of scale. In so doing, we checked for economies of scope by multi-product cost function as well as the impact of potential economies on the banking sector structure including 18 banks during the period 2008–2014. The changes in Panzar-Rosse H-Statistic as a result of the variety in products reflect changes in the monopolistic power. The results show that an increase in the variety of offered products increases banks’ monopolistic power.

Keywords: Iranian banking sector; variety-based economies; multi-level model; market structure; the generalized Panzar-Rosse model (search for similar items in EconPapers)
JEL-codes: F36 G21 L1 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:aicuec:v:65:y:2018:i:4:p:459-475:n:1

DOI: 10.2478/saeb-2018-0016

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