IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

A Bayesain Approach for Measuring Economies of Scale with Application to Large Scale Banks

Listed author(s):
  • M. W. Luke Chan
  • Dading Li
  • Dean C. Mountain

Traditionally, the literature has not found economies of scale for the very large banks. Among the reasons for these results are that usually large banks are not the sole focus of analysis and the analyzed banks may be subject to a diverse set of regulatory restrictions and limitations with respect to banking services. Our paper draws upon a panel data set containing information on the relatively large Schedule I Canadian banks. Although small in number, they offer extensive interbranch banking services under one set of regulations. In light of this, we propose a Bayesian methodology for estimating returns to scale. This technique allows for random coefficients and distinct input-allocative coefficients for each bank, and it provides reliable estimates of economies of scale using a panel data set with a small number of very large banks. In conclusion, we do find significant economies of scale.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by McMaster University in its series Department of Economics Working Papers with number 1999-01.

in new window

Date of creation: Jan 1999
Handle: RePEc:mcm:deptwp:1999-01
Contact details of provider: Postal:
1280 Main Street West, Hamilton, Ontario, L8S 4M4

Phone: (905) 525-9140 ext. 22765
Fax: (905) 521-8232
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:mcm:deptwp:1999-01. 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: ()

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.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.