Consolidation and Strategic Positioning in Banking with Implications for Europe

Boot, Arnoud W. A.

doi:10.1353/pfs.2003.0001

Cited by 21 publications

(12 citation statements)

References 70 publications

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“…According to Shephard's Lemma, we can develop the expression (1) with respect to the prices of production factors as follows: Boot (2003) stated that the possible sources of economies of scale and scope in banking are broadly divided in four groups: (1) economies of scale and scope related to information and communication technology, (2) economies of scale and scope arising through reputation and branding, (3) innovation-related economies of scale and scope, and (4) risk diversification. The analysis of the cost function of banks operating in Lebanon may lead us to identify the existence of scale and scope economies and the sources of these economies.…”

Section: Methodsmentioning

confidence: 99%

The Impact of Consolidation and Modernisation on Banking Scale and Scope Economies

Awdeh¹,

EL-Moussawi²,

Nasser³

2016

IJEF

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Lebanese banks recorded an enormous increase in size, customers' base, and products variety over the past two decades, which suggests the development of economies of scale and scope in the Lebanese banking sector. This study aims at testing the presence of these economies of scale and scope in the Lebanese banking sector, particularly over the period [2000][2001][2002][2003][2004][2005][2006][2007][2008][2009][2010][2011][2012][2013]. The estimation of a translogarithmic cost function by the maximum likelihood method shows that the Lebanese banks are -in general -characterised by the existence of increasing economies of scale. The analysis of economies of scope also reveals a complementarity between different outputs. Finally, the analysis of price elasticities of demand for production factors shows an important substitutability between labour and physical capital.

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Section: Methodsmentioning

confidence: 99%

The Impact of Consolidation and Modernisation on Banking Scale and Scope Economies

Awdeh¹,

EL-Moussawi²,

Nasser³

2016

IJEF

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“…Such lending is collateralized and hence is less risky. b) Banks" asset management can benefit from synergies and scale economies associated with managing entrusted funds (Boot, 2003).…”

Section: Variables Of Interestmentioning

confidence: 99%

Non-interest income and bank lending

Abedifar¹,

Molyneux

Tarazi³

2018

Journal of Banking & Finance

116

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This paper examines the influence of non-interest activities on bank lending in terms of loan quality and interest spread. We also investigate the possible existence of profit complementarities between non-interest activities and lending. Using quarterly data on 6,921 U.S. commercial banks between 2007:Q3 to 2016:Q3 we find that non-interest activities have no adverse influence on bank credit risk. This is the case for banks of different asset size (including systemically important banks) as well as for distressed banks. There is evidence that banks with assets between $100 million and $1 billion that have a greater share of fiduciary income have lower credit risk. They also have lower interest rates on loans secured by real estate, and higher franchise values, particularly post-crisis. Moreover, banks in the aforementioned size range benefit from synergies in joint production of non-interest income and lending, whereas other banks, in particular smaller banks (below $100 million in assets) suffer from diseconomies of joint production. Larger banks exhibit cross-subsidization between several non-interest activities and lending business.

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“…Scope economies therefore apply to all products that could be sold to the same client group. Examples for bank-insurance conglomerates 37 Two other sources can be identified (see Boot, 2003): financial innovation related economies and diversification benefits. Ceteris paribus, large institutions could better recoup the fixed costs of financial innovations.…”

Section: Information-technology Related Benefitsmentioning

confidence: 99%

The Competitive Challenge in Banking

Boot

Schmeits

2005

SSRN Journal

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The increasingly competitive environment poses challenges to bankers. This paper emphasizes relationship banking as a prime source of the banks' comparative advantage. The proliferation of transaction-oriented banking (trading and financial market activities) does however seriously challenge relationship banking.Competition from financial markets may well destabilize (traditional) durable relationships. However, we argue that, contrary to what many believe, banks may optimally respond by increasing relationship-specific investments. These observations echo the insights generated by fundamental research in the area of financial intermediation, and seem consistent with banks' recent strategic choices. We subsequently analyze the implications for the competitive positioning of banks. To this end, we discuss the rationales and empirical evidence regarding the recent consolidation and conglomeration trend in the financial sector, and the implications for both the industrial structure and the optimal internal organization of banks. We also discuss the potential disaggregation of the value chain via joint ventures or outsourcing.JEL Classification: G20, G21

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Consolidation and Strategic Positioning in Banking with Implications for Europe

Cited by 21 publications

References 70 publications

The Impact of Consolidation and Modernisation on Banking Scale and Scope Economies

The Impact of Consolidation and Modernisation on Banking Scale and Scope Economies

Non-interest income and bank lending

The Competitive Challenge in Banking

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