Economies of Scale and Degree of Capacity Utilization. Evidence from Retail Banks in Argentina
AbstractThe permanent income/transitory income distinction from consumption functions can be applied to cost functions. Transitory deviations of actual output from potential output, i.e. variations in capacity utilization, are relevant for the pattern of U-shaped average costs found in econometric studies. Data from retail banks in Argentina are used to illustrate this issue, with the number of branches as a proxy for potential output, and product per branch as a proxy for the utilization level. Economies of scale at the plant level can be reinterpreted as an indication of excess capacity in the banking industry.
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Bibliographic InfoPaper provided by Universidad del CEMA in its series CEMA Working Papers: Serie Documentos de Trabajo. with number 108.
Date of creation: Feb 1996
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More information through EDIRC
short-run costs; potential output; capacity utilization;
Find related papers by JEL classification:
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- G2 - Financial Economics - - Financial Institutions and Services
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jeffrey A. Clark, 1988. "Economies of scale and scope at depository financial institutions: a review of the literature," Economic Review, Federal Reserve Bank of Kansas City, issue Sep, pages 16-33.
- Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
- Barsky, Robert B & Miron, Jeffrey A, 1989.
"The Seasonal Cycle and the Business Cycle,"
Journal of Political Economy,
University of Chicago Press, vol. 97(3), pages 503-34, June.
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