Large Bank Efficiency in Europe and the United States: Are There Economic Motivations for Geographic Expansion in Financial Services?
AbstractThis paper employs stochastic frontier cost and profit models to estimate the efficiency of multibillion dollar European and U.S. banks. Empirical results suggest that both large European and U.S. banks have decreasing (increasing) cost (profit) returns to scale. Also, large banks in Europe and the United States similarly exhibit increasing returns to scale and decreasing (increasing) scope economies for the cost (profit) model. However, large U.S. banks have higher average profit efficiency than European banks on average. We conclude potential efficiency gains are possible via geographic expansion of large European and U.S. banks.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Business.
Volume (Year): 78 (2005)
Issue (Month): 4 (July)
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Web page: http://www.journals.uchicago.edu/JB/
Other versions of this item:
- J.W.B. Bos & J.W. Kolari, 2003. "Large Bank Efficiency in Europe and the United States: Are There Economic Motivations for Geographic Expansion in Financial Services?," Research Series Supervision (discontinued) 61, Netherlands Central Bank, Directorate Supervision.
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
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