Economies of scale and technological development in securities depository and settlement systems
AbstractThe paper investigates the existence and extent of economies of scale in depository and settlement systems. Evidence from 16 settlement institutions across different regions for the years 1993–2000 indicates the existence of significant economies of scale. The degree of such economies, however, differs by size of settlement institution and region. While smaller settlement service providers reveal high potential of economies of scale, larger institutions show an increasing trend of cost effectiveness. Clearing and settlement systems in countries in Europe and Asia report substantially larger economies of scale than those of the US system. European cross-border settlement seems to be more cost intensive than that on a domestic level, reflecting chiefly complexities of EU international securities settlement and differences in the scope of international settlement services providers. The evidence also reveals that investments in implementing new systems and upgrades of settlement technology continuously improved cost effectiveness over the sample period.
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Bibliographic InfoPaper provided by EconWPA in its series Microeconomics with number 0405001.
Date of creation: 11 May 2004
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securities settlement; economies of scale; technological progress;
Find related papers by JEL classification:
- D4 - Microeconomics - - Market Structure and Pricing
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-05-26 (All new papers)
- NEP-COM-2004-05-26 (Industrial Competition)
- NEP-EEC-2004-05-16 (European Economics)
- NEP-FIN-2004-05-26 (Finance)
- NEP-MIC-2004-05-16 (Microeconomics)
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