Cost economies in EU banking systems

Article Abstract:

The cost functions of the French, German, Spanish and Italian banking systems were examined through the translog cost function methodology. The factors in the cost function was described as total costs, total loans, total securities, customer and short-term funding, average annual wage per employee and average price of capital. The data analyzed was from 1994 financial statements provided by the database of International Bank Credit Analysis Ltd. It was concluded that the French, Spanish and German systems were characterized by economies of scale throughout output sizes. The costs of Italian system, however, appeared to be subadditive, implying diseconomies of scale.

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Cost economies and interest rate margins in a unified European banking market

Article Abstract:

The cost economies and operating efficiencies of European banks were examined in view of the impending formation of a single European banking market. Data from the largest EC banks and some non-EC banks for the period 1989-90 were analyzed using a regression analysis. It was discovered that the European banking system has a U-shaped average cost function and that there were variations in efficiencies in all peer groups. The results imply that European banks stand to gain from reallocation of resources such as mergers, acquisitions and the establishment of branches and subsidiaries.

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Competition and market contestability in Japanese commercial banking

Article Abstract:

An empirical assessment of competitiveness is done in the Japanese banking industry using the Panzar-Rosse method to test for contestability. Changes in the behavior of Japanese commercial banks were observed from 1986-1988. The hypothesis test results are consistent with the lack of ventures into commercial banking by domestic entities. Potential competition in the market is needed to guarantee competitive pricing.

Analysis, Competition (Economics), Competitions

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