This paper documents the presence on average of cost economies of scope in the European banking industry, that is, banks minimize total costs, given a certain level of outputs, producing a differentiated mix of outputs. Our results are particularly important in the light of the 2014 structural reform proposal on the EU banking industry, which aims to separate the traditional commercial banking from the investment activity. The loss of efficiency for banks might have consequences for customers who could suffer an increase in the costs of financial services to try to compensate banks for their loss of efficiency. Bank regulations would be myopic if they focus on investor protections whilst neglecting bank efficiency.
|Title of host publication||Corporate Governance in Banking and Investor Protection|
|Number of pages||25|
|Publication status||Published - 2018|
- Economies of Scope