Empirical Study On Scale And Scope Economies In Commercial Banking

After joining the WTO,Chinese financial industry will face unprecedented challenges,in particular,competition between Chinese and foreign banks will become more and more intense.Faced integrate international financial environment,Chinese commercial banks improve their international competitions are key to their sustainable development. However,economies of scale and scope in commercial banks are the important factors which affect their international competition.Economies of scale of commercial banks can portray the relationship between the bank's size and the cost-effectiveness,Economies of scope of commercial banks can portray the bank income changes when they provide multiple businesses.Meanwhile,an economy of scale and scope in commercial banks is the common target when they run the banks under the condition of market economy.So study the commercial banks economies of scale and scope has a major theoretical and practical significance to improve the efficiency of commercial banks,guard against financial risks, and promote sustainable development of commercial banks.economies of scale and scope is not only a theoretical issue,but also an empirical question in Commercial Banks,so we should analysis this issue both from theoretical factor and empirical testing which used the practical data.Therefore,this paper reviewed the research results from the domestic and foreign scholars in the economies of scale and scope firstly.Based on this results we can come to the meaning of the scale and scope economies, and detailed describe the economic characteristics,as well as contact between the scale and scope economies.And from many angles which include cost,resource sharing and financial innovations to analysis scale and scope economies of commercial banks.In the followed empirical analysis,this paper made the sample with Chinese state-owned commercial banks and joint-stock commercial banks to discuss the overall pattern of market share,concentration and scale of development detailed.Based on the 1997-2006 data of commercial banks and set up "translog cost function" and "generalized Tran slog cost function" model separately,as well as come to the result of the regression.According to theoretical analysis and empirical test results,combined with our country's basic national conditions,to how to further improve Chinese commercial banks to economies of scale and scope-related policy recommendations.The empirical analysis show that:(1)Chinese commercial banks exist economies of scale and economies of scope from overall perspective;(2) The scale economies of state-owned commercial banks are better than joint-stock commercial banks and exists positive correlation between economies of scale and scale asset of commercial banks;(3) the perfect property rights system,efficient performance management,excellent asset quality and continued financial innovation in commercial banks can promote the development of economies of scale,so that this internal effects are essential to commercial banks;(4) the scope economies of joint-stock commercial banks are better than state-owned commercial banks,the large correlation between economies of scope and intermediate business and investment business.