Are European banks too big? Evidence on economies of scale’

Elena Beccalli*, Mario Anolli, Giuliana Borello

*Corresponding author

Research output: Contribution to journalArticle

36 Citations (Scopus)

Abstract

In light of the policy debate on too-big-to-fail we investigate evidence of economies of scale for 103\r\nEuropean listed banks over 2000–2011. Using the Stochastic Frontier Approach, the results show that\r\neconomies of scale are widespread across different size classes of banks and are especially large for\r\nthe biggest banks. At the country level, banks operating in the smallest financial systems and the countries\r\nmost affected by the financial crises realize the lowest scale economies (including diseconomies)\r\ndue to the reduction in production capacity. As for the determinants of scale economies, these mainly\r\nemanate from banks oriented toward investment banking, with higher liquidity, lower Tier 1 capital,\r\nthose that contributed less to systemic risk during the crises, and those with too-big-to-fail status.
Original languageEnglish
Pages (from-to)232-246
Number of pages15
JournalJOURNAL OF BANKING & FINANCE
Issue number58
DOIs
Publication statusPublished - 2015

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

Keywords

  • banche
  • banks
  • economie di scala
  • economies of scale

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