Optimal Industrial Structure in Banking

43 Pages Posted: 15 Feb 2008

See all articles by Loretta J. Mester

Loretta J. Mester

Federal Reserve Bank of Cleveland; University of Pennsylvania - The Wharton School

Date Written: July 25, 2005

Abstract

This paper discusses the research agenda on optimal bank productive efficiency and industrial structure. One goal of this agenda is to answer some fundamental questions in financial industry restructuring, such as what motivates bank managers to engage in mergers and acquisitions, and to evaluate the costs and benefits of consolidation, which is essentially an empirical question. The paper reviews the recent literature, including techniques for modeling bank production and the empirical results on scale economies, scope economies, and efficiency in banking.

Suggested Citation

Mester, Loretta J., Optimal Industrial Structure in Banking (July 25, 2005). FRB of Philadelphia Working Paper No. 08-2, Available at SSRN: https://ssrn.com/abstract=1092217 or http://dx.doi.org/10.2139/ssrn.1092217

Loretta J. Mester (Contact Author)

Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States

University of Pennsylvania - The Wharton School

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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