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Impact of Trade Area Environment on Bank’s Comparative Advantages

Aude Hubrecht () and Hervé Leleu ()
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Aude Hubrecht: Université de Bourgogne

Working Papers CREGO from Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations

Abstract: This paper analyzes the relationship between the comparative advantages of bank branches and the trade area environment. Bank branches are points of sale whose trade environment influences their activities and performance. Comparative advantages are defined, for each output mix, by the strict dominance of a production technology in a specific trade area over the production technologies of other environments. Using Shephard’s output distance functions on a sample of 728 bank branches, we compare the production technologies for different output mixes and different trade environments. We show that none of the production technologies strictly dominates the others and none of them is strictly dominated. Therefore, each trade area benefits from comparative advantages that we try to highlight. Finally, we evaluate the performance of the central banks regarding their ability to provide the right incentives on output mixes to their bank branches so that the latter may benefit from their comparative advantages.

Keywords: banks; comparative advantage; production technology; Shephard's output distance; trade area environment Note: (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2004-12
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Related works:
Journal Article: Impact of trade area environment on bank's comparative advantages (2008) Downloads
Working Paper: Impact of trade area environment on bank's comparative advantages (2008)
Working Paper: Impact of trade area environment on bank's comparative advantages (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:dij:wpfarg:1041201

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Angèle Renaud, CREGO, 2 Bd Gabriel, BP 26611, 21066 Dijon Cedex, France

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