IDEAS home Printed from https://ideas.repec.org/a/taf/irapec/v23y2009i1p71-88.html
   My bibliography  Save this article

Product mix, transactions and cost behaviour: a study of South African bank branches

Author

Listed:
  • Charles Okeahalam

Abstract

This paper utilizes microeconomic theory and a panel data set to assess the impact of product mix and transactions on cost behaviour of bank branches in South Africa over the short and long-term. Estimates of properties of concavity and monotonocity indicate that the cost functions of typical bank branches in South Africa are neither consistent with short-term nor long-term cost-minimizing behaviour. This corroborates earlier findings which indicate that South African banks have low production efficiency and high market power. In addition the cost functions and two production-output type indices indicate that overall, the intermediation-output type mix (foreign exchange and custodial services) has a more significant effect on cost behaviour than the production-output type mix (cheque and deposit accounts). The variety of production-output type services provided by a branch appears to have limited effect on costs. However the financial value of production-output type transactions has an impact on costs while the financial value of intermediation type products does not. Branches that provide intermediation-output type products tend to have higher variable costs - the key determinant of costs is the number of transactions.

Suggested Citation

  • Charles Okeahalam, 2009. "Product mix, transactions and cost behaviour: a study of South African bank branches," International Review of Applied Economics, Taylor & Francis Journals, vol. 23(1), pages 71-88.
  • Handle: RePEc:taf:irapec:v:23:y:2009:i:1:p:71-88
    DOI: 10.1080/02692170802496794
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/02692170802496794
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    banking; product mix; cost behaviour; South Africa;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:irapec:v:23:y:2009:i:1:p:71-88. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: http://www.tandfonline.com/CIRA20 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.