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Measuring Scale Economies in a Heterogeneous Industry: The Case of European Settlement Institutions

Editor

Listed:
  • Morten Balling

Author

Listed:
  • Patrick van Cayseele
  • Christophe Wuyts

Abstract

We examine whether the European settlement institutions are technically efficient. This is done by means of estimating a translog cost function, and investigating whether scale economies are fully exploited. Since the sample is quite heterogeneous, fixed effects regression is introduced. From the results obtained, there clearly are economies of scale in this industry throughout all output ranges. This implies that further consolidation in this industry probably is ahead.

Suggested Citation

  • Patrick van Cayseele & Christophe Wuyts, 2006. "Measuring Scale Economies in a Heterogeneous Industry: The Case of European Settlement Institutions," SUERF Studies, SUERF - The European Money and Finance Forum, number 2006/3 edited by Morten Balling, May.
    • Handle: RePEc:erf:erfstu:41
    as

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    References listed on IDEAS

    as
    1. Van Cayseele Patrick & Reynaerts Jo, 2011. "Complementary Platforms," Review of Network Economics, De Gruyter, vol. 10(1), pages 1-33, March.
    2. Russo, Daniela & Hart, Terry L. & Malaguti, Maria Chiara & Papathanassiou, Chryssa, 2004. "Governance of securities clearing and settlement systems," Occasional Paper Series 21, European Central Bank.
    3. Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, June.
    4. Patrick Van Cayseele, 2004. "Competition and the Organisation of the Clearing and Settlement Industry," Working Papers of Department of Economics, Leuven ces0413, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    5. Daniela Russo & Terry L. Hart & Chryssa Papathanassiou, 2004. "Governance of securities clearing and settlement systems," Occasional Paper Series 21, European Central Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Beijnen, Christine & Bolt, Wilko, 2009. "Size matters: Economies of scale in European payments processing," Journal of Banking & Finance, Elsevier, vol. 33(2), pages 203-210, February.
    2. Van Cayseele, Patrick & Wuyts, Christophe, 2007. "Cost efficiency in the European securities settlement and depository industry," Journal of Banking & Finance, Elsevier, vol. 31(10), pages 3058-3079, October.

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    More about this item

    Keywords

    Technical Efficiency in Settlement and Safekeeping; Estimating Cost Functions on Panel Data; Sample Heterogeneity and Fixed Effects;
    All these keywords.

    JEL classification:

    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs
    • D2 - Microeconomics - - Production and Organizations
    • G2 - Financial Economics - - Financial Institutions and Services
    • L8 - Industrial Organization - - Industry Studies: Services

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