Consolidation, scale economies and technological change in Japanese banking
AbstractThe paper examines the technological structure of the Japanese banking sector before the onset of the banking crisis and structural reforms of the 90s in order to shade light on the logic of the recent trend to consolidation in the industry. While diseconomies of scale are shown to be pervasive in the large banks, defying the rationale for consolidation, the paper presents evidence of an underlying technological progress that operates to significantly increase the industryâs efficient minimum size, generating economies at larger banks, thus justifying the ongoing trend in consolidation. The results suggest that, to the extent that consumers can benefit from lower costs of bank production, policies that promote a more concentrated banking structure might be consistent with public interest.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of International Financial Markets, Institutions and Money.
Volume (Year): 16 (2006)
Issue (Month): 5 (December)
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Web page: http://www.elsevier.com/locate/intfin
Other versions of this item:
- Solomon Tadesse, 2005. "Consolidation, Scale Economics and Technological Change in Japanese Banking," William Davidson Institute Working Papers Series wp878, William Davidson Institute at the University of Michigan.
- Solomon Tadesse, 2005. "Consolidation, Scale Economies and Technological Change in Japanese Banking," William Davidson Institute Working Papers Series wp747, William Davidson Institute at the University of Michigan.
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
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