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Do Consumers Pay for One-Stop Banking? Evidence from a NonStandard Revenue Function

By Lawrence B. Pulley, Allen N. Berger, David B. Humphrey and Anthony M. Santomero


: Synergies in providing financial services can reduce costs due to joint production (cost economies of scope) or raise revenues due to joint consumption (revenue economies of scope). Cost economies of scope between bank deposits and loans were found to be small elsewhere. Revenue economies of scope are investigated here for the first time and found to be nonexistent over 1978-1990 for both small and large banks and for those on or off the revenue-efficient frontier. The lack of synergies between deposits and loans-where benefits are most likely to occur-suggests few synergies from an expansion of banking powers. JEL: G21, L89, D20 Keywords: bank, revenue, scope economies, deposits I. Introduction. Much has been made of the presumed advantages associated with the joint production and joint consumption of various financial services. For example, the gains believed to be associated with the joint provision of bank deposits and loans constitute a primary argument for expanding bankin..

Topics: bank, revenue, scope economies, deposits 1
Year: 1994
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