EconPapers    
Economics at your fingertips  
 

Who said large banks don't experience scale economies? Evidence from a risk-return-driven cost function

Joseph Hughes () and Loretta Mester

No 11-27, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: Earlier studies found little evidence of scale economies at large banks; later studies using data from the 1990s uncovered such evidence, providing a rationale for very large banks seen worldwide. Using more recent data, the authors estimate scale economies using two production models. The standard risk-neutral model finds little evidence of scale economies. The model using more general risk preferences and endogenous risk-taking finds large scale economies. The authors show that these economies are not driven by too-big-to-fail considerations. They evaluate the cost implications of breaking up the largest banks into banks of smaller size.

Keywords: Production (Economic theory); Risk; Systemic risk; Banks and banking (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-ban and nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
https://www.philadelphiafed.org/-/media/frbp/asset ... ers/2011/wp11-27.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
Journal Article: Who said large banks don’t experience scale economies? Evidence from a risk-return-driven cost function (2013) Downloads
Working Paper: Who Said Large Banks Don't Experience Scale Economies? Evidence from a Risk-Return-Driven Cost Function (2013) Downloads
Working Paper: Who said large banks don’t experience scale economies? Evidence from a risk-return-driven cost function (2013) Downloads
Working Paper: Who Said Large Banks Don't Experience Scale Economies? Evidence from a Risk-Return-Driven Cost Function (2011) Downloads
Working Paper: Who Said Large Banks Don't Experience Scale Economies? Evidence from a Risk-Return-Driven Cost Function (2011) Downloads
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:fip:fedpwp:11-27

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of Philadelphia Contact information at EDIRC.
Bibliographic data for series maintained by Beth Paul ().

 
Page updated 2022-11-25
Handle: RePEc:fip:fedpwp:11-27