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| Author: | Bossone, B. Lee, J-K. |
| Title: | In finance, size matters: the "systemic scale economies" hypothesis |
| Journal: | IMF Staff papers
2004 : VOL. 51:1. p. 19-46 |
| Index terms: | Economies of scale Efficiency Financial intermediaries Financial services Production |
| Language: | eng |
| Abstract: | The relationship between production efficiency in financial intermediation and financial systems size is studied in this article. The study predicts and tests for the existence of "systemic scale economies" (SSE) effects, whereby value-maximizing intermediaries operating in large systems are expected to have lower costs of production, risk absorption, and reputation signaling than intermediaries operating in small systems. The mechanics of SSEs are explored and their quantitative relevance is estimated using a large cross-country banking data panel. |
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