Universal Banking in the United States: What Could We Gain? What Could We Lose?

By Anthony Saunders; Ingo Walter | Go to book overview

3
Economies of Scale and
Scope Among the World's
Largest Banks

Do economies of scale and scope exist in financial services? This question lies at the heart of strategic and regulatory discussions about optimal firm size in the banking sector. From a public policy perspective, geographic restrictions and barriers between banking, securities, and insurance have prevailed in the United States, but are either less onerous or entirely absent in most of the other OECD countries. If economies of scale and scope are indeed important determinants of competitive performance, then the traditional U.S. interstate branching and functional limits may have had a significant adverse impact on U.S. bank's attempts to compete against their foreign-based rivals.

In this chapter, we consider economies of scale and scope in the financial services sector in the context of the distinction between universal banking and functionally separated banking. We sketch out an analytical framework, review the literature, and present two sets of empirical tests on data taken from the world's 200 largest banks during the 1980s. We find statistically significant evidence, among these 200 very large banks, that some enjoyed overall economies of scale, but that these economies of scale were not reflected in higher comparative growth rates. We also find strong evidence of supply-related diseconomies of scope between lending and feeearning banking activities. These findings may be important as explanations for the competitive performance of individual banks, as well as for regulatory reforms.

In an information- and distribution-intensive industry with substan-

-69-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited page

Bookmark this page
Universal Banking in the United States: What Could We Gain? What Could We Lose?
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this book
  • Bookmarks
  • Highlights & Notes
  • Citations
/ 276

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.