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Cost efficiency, economies of scale and economies of scope in the British retail banking sector

By J.K. Ashton

Abstract

In this paper the efficiency characteristics of the British retail banking\ud sector are investigated. Distribution free cost efficiency, economies of\ud scale and economies of scope are all measured. The study employs a one\ud way fixed effects model with a translog specification of productive\ud technology. Both ‘production’ and ‘intermediation’ models of bank\ud production are employed and contrasted. A substantial distribution of cost\ud efficiency is observed in this most important commercial sector. Overall,\ud slight dis-economies of scale are reported for the ‘intermediation’\ud approach and substantial diseconomies of scale are recorded for the\ud ‘production’ approach. A substantial dispersion of cost efficiency is\ud observed for this sector with both model specifications

Topics: ffe, com
Publisher: Bournemouth University School of Finance and Law
Year: 1998
OAI identifier: oai:eprints.bournemouth.ac.uk:3069

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