Journal article
Does Multiproduct Production In Large Banks Reduce Costs?
Economic review (Atlanta, Ga.), Vol.74(3), pp.2-11
05/01/1989
Abstract
It has been argued that allowing banks to provide multiple financial products would benefit society by making more choices available to consumers while reducing their transactions costs. The issue of global product deregulation is examined by focusing on bank production efficiency issues in the current literature and through empirical evidence. The cost structure of a large-bank sample was examined using the intermediation approach to bank production. There were 5 bank products analyzed for 312 banks. The results indicate that, for commercial banks with up to $5 billion in assets, no appreciable cost savings accrue from multiproduct production. For banks with assets between $5 billion and $25 billion, multiproduct production actually increases production costs. Multiproduct production does not appear to afford a cost advantage. Product liberalization is more likely to increase bank customer welfare by reducing transaction costs and helping to diversify banks.
Details
- Title: Subtitle
- Does Multiproduct Production In Large Banks Reduce Costs?
- Creators
- William HunterStephen Timme
- Resource Type
- Journal article
- Publication Details
- Economic review (Atlanta, Ga.), Vol.74(3), pp.2-11
- ISSN
- 0732-1813
- eISSN
- 2163-3258
- Publisher
- Federal Reserve Bank of Atlanta
- Language
- English
- Date published
- 05/01/1989
- Academic Unit
- Finance
- Record Identifier
- 9984963133202771
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