Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/209819 
Year of Publication: 
2003
Series/Report no.: 
Working Paper No. 2003/5
Publisher: 
Norges Bank, Oslo
Abstract: 
This paper demonstrates the importance of using a flexible cost function specification when analyzing economies of scale and estimating the cost effect of banking mergers. The inflexibility of the translog cost function is illustrated and results are compared to more flexible spline and Fourier cost functions. Using these different approaches we predict the ex ante effect on average cost from mergers over 1987-1998 using a balanced panel of 130 Norwegian banks. On average mergers are predicted to lower costs. Predictions using the Fourier or spline approach are in overall agreement with computed actual average merger-cost changes ex post. Cost effects of electronic payments are also estimated and exceed cost reductions associated with mergers.
Subjects: 
economies of scale
functional form
mergers
JEL: 
G21
L11
Persistent Identifier of the first edition: 
ISBN: 
82-7553-213-2
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.