Financial Deregulation and Economies of Scale and Scope: Evidence from the Major Australian Banks

In this study a parametric approach employing a flexible translog functional model is used to estimate economies of scale and scope in the four major Australian banks (ANZ, NAB, CBA and WESTPAC). Two hypotheses are tested to determine whether bank economies of scale have changed and also whether economies of scope were exhausted following financial deregulation. The analysis reveals that there is evidence for a continuing difference in banks' economies of scale as a result of deregulation. The empirical evidence also suggests that economies of scope were not exhausted by financial deregulation. In addition, there is continuing evidence of considerable economies of scope in the four major banks. In other words, Australian banks have not fully embraced deregulation and adjusted their joint production in a cost efficient manner. Findings in this study indicate that further deregulation would create a more competitive and efficient banking environment in Australia.     

A Fundamental Approach to Estimating Economies of Scale and Scope of Financial Products: The Case of Mutual Funds

We propose a Fundamental approach to estimate the economies of scale and scope for financial institutions offering multi-product lines. We first estimate pure economies of scale from its fundamental definition, which is the marginal cost reduction that is to be achieved by single product firms of increasing size that offer the same product. Similarly, we estimate the economies of scope from its fundamental definition, as the marginal cost reduction achieved by the addition of a new product line. Operationally, we compare the cost of operating a say, 3 product-line financial institution with the cost of operating a portfolios of companies that are synthetically created from a control sample of financial institutions offering fewer, such as 2 and 1 similar product lines. When this approach is applied to mutual funds data, we find economies of scale for some fund type. The evidence on marginal cost economies due to increasing scope is rather weak. The results have practical implications for potential organizers and current management of investment companies.     

基于规模经济和技术进步两种效应的商业银行效率研究

利用超对数成本函数,从规模经济和技术进步角度,对中国商业银行1995到2005年的效率进行实证表明,一方面,中国商业银行业存在着规模经济和技术进步正效应,这主要得益于股份制商业银行;另一方面,国有商业银行的规模不经济和技术进步负效应,导致中国商业银行业的效率较低.因此,要保持中国商业银行业效率的不断提高,必须压缩国有商业银行的规模,加快股份制商业银行的发展,改善商业银行的治理结构.完善金融人才的培养机制.     

基于TCF函数的中国城市商业银行规模经济探究

通过收集52家城商行年度报告数据,建立超越对数成本函数（TCF）,得出规模经济系数,进而判断我国城商行的规模经济效应。同时,建立规模因子与资产规模的散点图,得出城商行的规模经济变动趋势,并据此分别得出不同资产规模的城商行发展战略。     

Governance and Funds Allocation in United States Medical Research Charities

We examine boards of directors of medical research charities and find that medical charities spend less on program activities and more on fund-raising when the executive director of the charity serves on the board of directors, especially when the board is small. Executive salaries are also higher at charities where management is represented on the board. Management and general expenses and fund balances are, however, unrelated either to the presence of an insider on the board or to the size of the board.     

How Issue Size, Risk, and Complexity are Influencing External Financing Costs: German IPOs Analyzed from an Economies of Scale Perspective

This paper is focused on the cost of raising capital in Germany. A cross-sectional analysis of flotation cost data for 117 IPOs over the years 1993–1998 is presented. We find average flotation costs to be 7.77 percent of gross proceeds, while underwriting fees average 5.01 percent. Our results extend the literature in two important directions. First, contrary to the conventional economies of scale view we find marginal spreads to be rather constant in gross proceeds and to be higher for more risky and more complex offerings. Fixed costs amount to 5 to 9 percent of underwriting fees. Second, by applying a principal component analysis we find issue size, an issuer risk factor, and an offering method complexity factor to have an economicaly meaningful impact on underwriting fees.     

Scale Economies in Credit Unions: Accounting for Subsidies Is Important

In 1998, the Credit Union Services Corporation Australia Limited (CUSCAL) recommended that Australian credit unions with assets below $5 million should consider merging with larger credit unions. This industry position is at odds with empirical studies, which find little evidence of increasing returns to scale in credit unions. However, an important bias in previous studies of scale economies in credit unions has been the omission of credit union subsidies. This paper shows that the failure to account for subsidies biases the results toward finding diseconomies of scale. After correcting for the subsidy bias, there is very strong evidence of increasing returns to scale in a sample of New South Wales credit unions, supporting the industry recommendation.     

Institutional Reforms,EU Accession,and Bank Efficiency in Transition Economies: Evidence from Bulgaria

This paper examines the efficiency of Bulgarian banks and its determinants over the period 1999-2007. The levels of technical, allocative, and cost efficiency are estimated using a nonparametric methodology and then regressed on a number of bankspecific, institutional, and EU-related factors. The findings indicate that foreign banks were more efficient than domestic private banks, although the gap between them narrowed over time. State-owned banks ranked last, but their privatization resulted in efficiency gains. Capitalization, liquidity, and enterprise restructuring enhanced bank efficiency, whereas banking reforms had an adverse effect. The Treaty of Accession and EU membership were associated with significant efficiency improvements.     

Banking Mergers: The Impact of Financial Liberalization on the Taiwanese Banking Industry

The objective of this paper is to examine the nature of the Taiwanese banking sector and to analyze the impact of financial liberalization on the Taiwanese banking industry. We present empirical evidence to show that the recent wave of bank mergers observed in other countries is also suitable for Taiwan. Based on empirical results for overall economies of scale and expansion path subadditivity, Taiwanese banks should obtain the benefit of scale economies by merging with other banks rather than expanding by opening more branches. Furthermore, we show that the Relative Market Power hypothesis—which postulates that greater market shares lead to higher profitability—finds empirical support in Taiwanese banking data after financial reforms were enacted.     

我国国有商业银行与股份制商业银行规模经济的比较分析:1995-2005

本文以我国1995-2005年的银行数据为样本,比较分析一直以来都让世人所关注的我国不同所有制商业银行的规模经济问题.在介绍国内外有关银行业规模经济问题研究的文献综述基础上,通过依据大量相关具体数据对我国银行业的市场结构及效益问题进行经验性的判断比较,最后运用超越对数成本函数对我国国有商业银行与股份制商业银行的规模经济问题进行实证比较分析,并得出结论:从总体上看,我国商业银行规模系数变化不大,但近几年来在规模效率方面,国有商业银行相对于股份制商业银行来说进步更为显著.     

我国保险业的规模效率和规模经济估算

本文利用基于数据包络分析方法（DEA）的规模报酬不变模型（CRS）和规模报酬可变模型（VRS）,对我国主要保险公司规模效率和规模经济进行了分析。研究结果表明,我国保险业存在着规模经济现象,但似乎不存在最佳规模点;保险业的规模效率逐年下降,保险公司之间的规模效率差异在拉大,已成为保险业效率下降的主要原因。     

The Response of Bank Retail Rates to Money Market Rates in the BRIC Economies: An Application of the Disaggregated GETS Model

The purpose of this paper is to examine the interest rate transmission mechanism for the emerging BRIC economies (Brazil, Russia, India, and China). We analyze the way interbank rates are transmitted to the bank retail rates, and we test the symmetry hypothesis. A disaggregated general-to-specific model is applied for estimating interest rate pass-through and examining whether retail rates respond symmetrically or asymmetrically to upward/downward interbank rate changes. Overall, our empirics show evidence of sluggish and incomplete pass-through from market rates to bank loan and deposit rates. We show that banks' speed of upward and downward adjustment behavior is symmetric in both loan and deposit markets.     

Towards the formalization of ‘small is beautiful’: Societal effectiveness versus economic efficiency

Economic efficiency criteria are often based on considerations of concentration, standardization and centralization of activities which may undertake or omit entirely various internal and external diseconomies of by-products associated with any growth process. This paper re-examines the context in which the efficiency criterion is usually applied. The notion of effectiveness is analysed theoretically from two perspectives. Social costs are introduced initially in a static framework and then the inertia of large organizations is discussed in a dynamic perspective. The flexibility of the system in adjusting to rapid changes in technology is analysed from a structural approach based on smaller and more decentralized organizations.     

Universal Banking,Conflicts of Interest and Firm Growth

This paper studies the relationship between universal banking and firm performance. With 40 developing and developed countries, I find that the overall effect of universal banking on firm growth is negative. This suggests that the negative effect of conflicts of interest dominates the positive effect of economies of scale and scope in universal banking. However, in countries with stronger protection of creditors’ rights and higher information efficiency, conflicts of interest are less likely and the negative relationship between universal banking and firm growth is significantly weaker.

The mystery of the missing members: the first 600 chartered accountants in England and Wales

There are a number of factual errors within the authoritative literature on the history of the Institute of Chartered Accountants in England and Wales and of its five founder bodies. The aim of this article is to outline some of these errors, explain how and why they arose, and attempt to correct them. Its primary concern is to establish the membership of these early professional accountancy bodies at the time of the granting of a royal charter in May 1880.     

Scale and the Scale Effect in Market‐based Accounting Research

The nature of the data we usually encounter in market‐based accounting research is such that the results of the regressions of market capitalization on financial statement variables (referred to 'price‐levels' regressions) are driven by a relatively small subset of the very largest firms in the sample. We refer to this overwhelming influence of the largest firms as the 'scale effect'. This effect is more than heteroscedasticity. It arises due to the non‐linearity in the relation between market capitalization and the financial statement variables. We present the case that scale is market capitalization rather than a correlated omitted variable. Since scale is market capitalization, we advocate its use as a deflator in a regression estimated using weighted least squares. This regression overcomes the scale effect and the resultant regression residuals are more economically meaningful. Christie's (1987) depiction of scale is the same as ours but he advocates the use of the returns regression specification in order to avoid scale effects. We agree that returns regressions should be used unless the research question calls for a price‐levels regression.     

我国金融机构的组织规模、空间分布与效率改进

金融机构的组织规模和网点分布密切相关,规模扩张通常意味着分支机构网点的空间扩张.金融业是关系密集型行业,关系在不同的金融产品和服务中的重要性是不一样的,其经营的经济规模也是不一样的.个人保险类金融产品关系性最低,其经营也最接近普通消费品的营销原则;公司类产品最具有关系性,其经营最依赖于银企双方的关系.金融产品和服务中关系型的经济规模较小,非关系型的经济规模较大.金融机构经营领域是不同关系类型的金融产品和服务的业务集合,这很容易使金融机构过度膨胀.通过机构专业化、组织集团化和配送一体化可以改变这一特征并提高金融机构运营效率.     

Technical, Allocative and Scale Efficiencies of REITs: An Empirical Inquiry

Abstract:   This paper empirically explores various efficiency aspects of Real Estate Investment Trusts (REITs) in light of their remarkable growth in the 1990s. We find clear evidence of considerable technical inefficiency in REITs, though not much indication for allocative or scale inefficiency. The results also suggest that an increasing number of REITs has been operating under diseconomies of scale since the late 1990s primarily due to the recent wave of consolidation and merger activities. As creatures of the US tax code, REIT's have undergone several changes to their operating status, and our results suggest that the prevalent regulatory environment appears too onerous for the industry and may have contributed to the REITs' poor efficiency performance. In particular, further cuts or total elimination of the dividend restriction on REITs could provide much needed relief and stability in the US real estate market.     

Observable Consequences of Trading Structure Differences: On the Use of Variance Ratios in Microstructure Studies

This paper examines the variance ratio tests in studies of transitory volatility and concludes that the variance ratio is an appropriate test of trading structure differences only under certain assumptions regarding the evolution of underlying stock prices and the autocorrelation structure of returns. This result raises caution as to the interpretation of results bases upon the 24-hour variance ratio methodologies in studies of transitory volatility and trading structure effects. A numerical example indicates that errors in inferences can be severe.     

Measuring audit quality of local governments in England and Wales

The purpose of this paper is to model and test the audit quality provided to local governments in England and Wales. A key question is: are there major differences in audit quality provided? The Audit Commission, a national public body under Parliament, regulates the audits. It sets audit standards, appoints the auditors, and (although each auditor and client local government set the specific audit fee for that client) it establishes a formula to determine standard audit fees. The Audit Commission also conducts an annual review of the audit quality provided by the selected auditors, as well as a survey of client satisfaction. The majority of audits are conducted by District Auditors (public sector employees of the Audit Commission). About a quarter of local governments are audited by one of six private sector auditors (including three of the Big 4). Actual results indicate that audit quality differences are associated with the number of governmental audit clients and local government type. Generally, there were modest quality differences by auditor category.