Estimates of scale and cost efficiency for Federal Reserve currency operations
AbstractMeeting the currency demands of depository institutions, businesses, and consumers costs the Federal Reserve more than half a billion dollars each year, yet, very little research has been devoted to understanding what factors affect such costs. The authors estimate a cost function in order to obtain estimates of scale and cost efficiency for this service. They find that as in other paper-based technologies, such as checks, scale economies are achieved at a relatively low level of output, implying that currency services are not a natural monopoly. They also provide estimates of facility-specific marginal costs and returns to scale measures that could be used to improve resource allocations. Lastly, they find that the average processing facility operates at more 80 percent of the efficiency of the “best practice” facility, comparable to cost efficiency estimates that have been reported elsewhere for private-sector financial institutions.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Federal Reserve Bank of Cleveland in its journal Economic Review.
Volume (Year): (2001)
Issue (Month): Q IV ()
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Takala, Kari & Viren, Matti, 2008. "Efficiency and costs of payments: some new evidence from Finland," Research Discussion Papers 11/2008, Bank of Finland.
- Jorge Galán Camacho & Miguel Sarmiento Paipilla, .
"Staff, Functions, and Staff Costs at Central Banks: An International Comparison with a Labor-demand Model,"
Borradores de Economia
419, Banco de la Republica de Colombia.
- Jorge Galán Camacho & Miguel Sarmiento, 2006. "Staff, Functions, and Staff Costs at Central Banks: An International Comparison with a Labor-demand Model," BORRADORES DE ECONOMIA 003524, BANCO DE LA REPÚBLICA.
- Jorge Eduardo Galán Camacho & Miguel Sarmiento Paipilla, 2007.
"Banknote Printing At Modern Central Banking:Trends, Costs, And Efficiency,"
BORRADORES DE ECONOMIA
004393, BANCO DE LA REPÚBLICA.
- Jorge Eduardo Galán Camacho & Miguel Sarmiento Paipilla, . "Banknote Printing At Modern Central Banking: Trends, Costs, And Efficiency," Borradores de Economia 476, Banco de la Republica de Colombia.
- Loretta J. Mester, 2003. "Applying efficiency measurement techniques to central banks," Working Papers 03-13, Federal Reserve Bank of Philadelphia.
- Robert DeYoung & William C. Hunter & Gregory F. Udell, 2003.
"The past, present, and probable future for community banks,"
Working Paper Series
WP-03-14, Federal Reserve Bank of Chicago.
- Robert DeYoung & William Hunter & Gregory Udell, 2004. "The Past, Present, and Probable Future for Community Banks," Journal of Financial Services Research, Springer, vol. 25(2), pages 85-133, April.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lee Faulhaber).
If references are entirely missing, you can add them using this form.