اقتصاد مقیاسی و دامنه ای در سیستم بانکداری اروپا
|کد مقاله||سال انتشار||تعداد صفحات مقاله انگلیسی||ترجمه فارسی|
|18233||2001||17 صفحه PDF||سفارش دهید|
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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of Multinational Financial Management, Volume 11, Issues 4–5, December 2001, Pages 515–531
The increasing competition induced by the European integration is leading to an intense process of consolidation among European banks, very similar to that, which occurred in the US banking industry in the 1980s. In this paper, we test if cost improvements in output efficiency are likely to emerge from the ongoing process and to derive some implications for the future market structure. Our results support the view that recent regulatory changes and progresses in technology have contributed to raising the optimal scale. We show that mergers should be oriented to increase bank scale for small banks and to expand into new product lines for large banks.
The aim of this paper is to analyze output efficiency of European banks in view of the ongoing process of integration and concentration. In order to test if cost improvements in the efficiency are likely to emerge from this process, we check for the presence of economies of scale and scope, as well as, the X-inefficiency of banks in six European countries. In the last few years, many factors have contributed to increase the competition among European financial institutions. The first important factor is deregulation, promoted by the Second European Directive on Banking and Financial Services, which leads banks to compete not only in the domestic markets but potentially all over the world. Moreover, technological advances and deregulation have promoted a process of despecialization, allowing banks to lend at any maturity, and reducing the differences among sectors. Banks reacted to the increased European competition with an intense process of restructuring and growth. This has led the banking industry to experience an unprecedented level of consolidation through merger and acquisitions operations among large financial institutions, very similar to that, which occurred in the US banking industry in the 1980s. The consolidation process is based on the possibility of reaping profitability, reducing cost inefficiency, increasing market power, and exploiting scale and scope economies. However, doubts arise as to whether consolidation leads in fact to these performance gains, given that, so far, the empirical literature based on the US experience does not support this common belief. The main conclusions of the empirical literature concerned with the US experience (Gilbert, 1984, Mester, 1987, Clark, 1996, Clark, 1988, Evanoff and Israilevich, 1991, Berger et al., 1993 and Humphrey, 1995) are that overall the average cost curve is relatively flat with some evidence of scale efficiency gains for small banks. On the contrary constant or slight diseconomies of scale prevail in the case of large banks. The results on scope economies are even more controversial since the literature provides little consensus on the existence and the extent of product mix efficiency (Berger and Humphrey, 1994). The inconsistency of those results are partially explained by theoretical and econometric limitations associated with measurement of scope economies (Berger et al., 1993, Pulley and Humphrey, 1993 and Clark and Speaker, 1994). The lesson from the US case for Europe would be that the only way to lower cost in banking is to improve the X-efficiency rather than focus on cross-border mergers and acquisitions. However, in contrast to the US empirical literature, the much smaller number of cost studies for Europe show that the average cost curve tends to be U-shaped and, to a less extent, also scope economies exist. Drake and Howcroft (1994) use the data of the UK clearing bank's branches and find that most of them were inefficient, showing slight increase returns to scale. Athanassopoulus (1995) and Glass and McKillop (1992) find diseconomies of scale and scope for one of the largest Irish banks, the Bank of Ireland. Among the studies based on data from a sample of national banks Levy-Garboua and Renard (1977) and Dietsch (1993) find scale economies in French banking. Studies for Italy (Cossutta et al., 1988 and Conigliani et al., 1991) show the existence of scale economies. Rodriguez et al. (1993) reveal both scale and scope economies for medium sized banks and diseconomies of scale and scope for larger institutions. By using data for a set of German banks, Altunbas et al. (1994) show that banks who offered a wider range of mixed products are more efficient than other banks. Zardkoohi and Kolaris (1994) find scale economies for medium-sized Finnish banks. Berg et al. (1993) show that larger Norwegian banks are more inefficient than smaller institutions. Altunbas and Molyneaux (1996) using 1988 data, show that for four European countries (France, Germany, Italy and Spain) scale economies exist over a wide scale range and scope economies exist only for the German banking system. Using a sample of 15 countries, Allen and Rai (1996) find that the magnitude of scale economies is particularly pronounced for small banks. The evidence provided by the existing literature makes the analysis of the European banking industry interesting not only for its differences with the US experience but also for the implications in terms of financial markets integration policies. Overall the empirical literature based on the European experience has mainly been focused on cost functions using data from a single bank or a single country. Moreover, most of these studies refer to pre-integration periods. Only a few studies (Allen and Rai, 1996 and Altunbas and Molyneaux, 1996) provide cross-country comparison of scale and scope economies, and to our knowledge, no studies apply this comparison to recent data to analyze the effects of the opening up of the banking domestic markets. The main innovation of our paper is to provide additional and recent evidence on banking efficiency in Europe, to analyze scale and scope economies as well as cost inefficiency, and to compare the results obtained across countries. Overall our evidence for the period 1992–1997 shows that while significant cost inefficiencies still emerge, especially for banks engaged in more traditional activities (commercial, cooperatives, saving and loans banks), significant scale and scope economies are present for most financial institutions. In contrast with the previous studies, which provide evidence of scale economies only for small sized banks, our analysis finds economies of scale at every level of production. However, scale economies are more pronounced for small sized financial institutions. Our results on scope economies are even more different from the previous literature. Only a few studies find economies of scope in the European banking systems and these economies are shown to exist only for large banks and for a few countries characterized by the universal nature of the banking model (Altunbas and Molyneaux, 1996). This paper finds scope economies for all the six countries analyzed and at all production levels. Our findings can be explained with the recent tendency in the European banking systems to move towards a more integrated banking model, suggesting that scope economies can increase as banks move towards the universal banking model. Finally, our analysis seems to support the ongoing tendency of banks to restructure and merge, suggesting that banks should enhance their output mix, in order to fully exploit economies of scale and scope. The paper is organized as follows. Section 2 describes the cost function, the measures of scale and scope economies, the data and the variables used in the empirical analysis. Section 3 presents the empirical findings and Section 4 draws some conclusions.
نتیجه گیری انگلیسی
In this paper, we analyze the output and X-inefficiency for a sample of European banks over the period 1992–1997 using a stochastic cost frontier model. While most of the empirical literature conclude that scale economies are exhausted at relatively low levels of output, our analysis found that despite small banks present the higher economies of scale in all countries, economies of scale exist at any production scale, and for almost every bank organizational type. This evidence may be due to the different data sets and sample period used in the empirical estimations, and to differences in the model specification. Our results support the view that recent regulatory changes and progresses in technology have contributed to raise the optimal scale. Moreover, the significant scope economies found across all output ranges confirm the prediction that the move towards universal banking promoted by the Second European Banking Directive increased the degree of scope economies. Economies of scope, more pronounced for large banks, may be related to the cost complementarities of investments with higher informational inputs. Increasing size and extended joint production of banking products can be justified by cost consideration. Results suggest that, in order to improve efficiency, large banks should concentrate on output mix diversification, while small banks should expand the scale of production. An interesting topic for further research concerns the cost effect of more diversification through mergers between banking and non-banking institutions (e.g. bank-assurance). Since internal growth is limited, cross-border takeovers are increasing to create bigger and more diversified institutions. Overall, our findings support the intensification of the ongoing process of merger and acquisitions. However, our results suggest that, if on the one side further gains in efficiency can emerge from the ongoing consolidation process, on the other national and EU policy makers should be concerned about an excessive level of concentration. The sector presents some monopoly characteristics that are likely to increase because of the effect of technological progress on the optimal scale. This implies the need for concern about the effectiveness of existing competition policies.