Technological change and economies of scale in Canadian financial institutions: A selection from competing hypotheses |
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| Affiliation: | 1. FBE Green House, School of Accounting & Finance, Faculty of Business & Economics, Laucala Campus, The University of the South Pacific, Suva, Fiji;2. School of Business, University of Bolton, Deane Road, Bolton BL3 5AB, UK;3. School of Global Business & Economics, Changwon National University, Gyeongnam, 9, Sarim Dong, 641-773 Changwon, Republic of Korea;4. Department of Business Administration, Business School, University of the Aegean, 8 Michalon street, Chios Island, Greece;1. Department of Economic Sciences, Indian Institute of Technology Kanpur, 208016, India;2. LSE India Observatory, London School of Economics and Political Science (LSE), London, UK;3. Department of Economic Sciences, Indian Institute of Technology Kanpur, Kanpur 208016, UP, India;4. Jindal Global Business School, O.P. Jindal Global University, India;5. Department of Banking and Finance, FEMA, University of Malta, Msida, Malta;6. Department of Economics, European University Institute, Via delle Fontanelle, 18, I-50014 Florence, Italy;1. Escola Superior de Agricultura “Luiz de Queiroz” – ESALQ/USP, University of São Paulo, Piracicaba, São Paulo, Brazil;2. Department of Economics, Londrina State University – UEL, Londrina, Paraná, Brazil |
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| Abstract: | This study isolates economies of scale from technological change in Canadian financial institutions. By employing the most general translog cost function and by using a sequential Akaike's information criterion test, we select the most appropriate model from 127 possible hypotheses. The results suggest that there exist increasing returns to scale and that technological change is not Hicks-neutral. In fact, technological change has resulted in greater relative expenditures on physical capital. These results suggest that further integration, centralization, and sharing of technology would be benificial in the Canadian financial industry. |
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