A Study On The Scope Economies Of Commercial Banks In China

Based on the theoretical analyses of scope economies for the banking industry, this paper examines china's situation empirically. Scope economies of the banking clearly describes the cost-revenue when banks offer sorts of products and operations. The relevant research on this can explain not only the bank's mergers and takeovers under the increasingly tougher competition after the comprehensive opening of China's banking industry, but the hybrid operation of financial industry.Scope economies are a theoretical and empirical problem, which requires theoretical analyses and the corresponding empirical tests. Therefore some microeconomic knowledge, such as input-output theory, transaction cost economics and information economies, is its theoretical foundation. On the basis of that, China's banking is empirically tested, which combines qualitative analysis and quantitative analysis. Then, through the horizontal comparison between the scope economies of the international banking industry and of China's banking industry, the paper gives some suggestions of reformation.The empirical result shows that scope economies do exist in China as a whole. There are no definitely relationship between scope economies and asset size of the bank, which demonstrates that loans, deposits, various businesses and investment are more profiting when being offered by a single bank than by there. Moreover, scope economies are a litter significant in Joint-stock commercial banks than that in state-owned ones, linked with the increasingly effective reforms in recent years. Thirdly, different banks have different scope economies on different businesses. Finally, in view of the tendency, scope economies of China's commercial banks are getting better. It implies both the relaxations of China's controls on the banking industry and the technical progress have enabled the scope economies of China's banking industry obviously. Implications for China are following: firstly, Strengthening the internal control, improving corporate governance institutions of the commercial banks and forms the platform for scope economy. Secondly, allowing commercial banks appropriate mixed operations, and establishing mixing industry management pattern primarily by bank holding. Thirdly, establishing and improving the talent strategy based on customer manager system. Finally, increasing investment in science and technology, raising financial innovation ability, and building customer demand-oriented service platform so as to form a different income structure.