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An Evaluation of Economies of Scale and Scope via Cost Function: The Case of Iranian Banking Industry (in Persian)

Author

Listed:
  • Khodadad kash, Farhad

    (Payame Noor University)

  • hoseini, hona sadat

    (Iran)

Abstract

The purpose of this paper is to evaluate the overall economies of scale, specific economies of scale and economies of scope for Iranchr('39')s Banking industry. In this order, a Translog Cost function was used. For estimating the model, we use Iranchr('39')s banking industry data during period 1380-91, the cost function and input-share function. The model is estimated by Seemingly Unrelated Regression (SUR) system. Our findings imply that Iranchr('39')s Banking industry enjoy relatively small economies of scale. The extent of economies of scale is 0.39. The results also show that the specific economies of scale for both loan and investment is at a low level. The results also indicate that to provide various services Simultaneously leads to economies of scope in Iran’s banking sector.

Suggested Citation

  • Khodadad kash, Farhad & hoseini, hona sadat, 2017. "An Evaluation of Economies of Scale and Scope via Cost Function: The Case of Iranian Banking Industry (in Persian)," Journal of Monetary and Banking Research (فصلنامه پژوهش‌های پولی-بانکی), Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 10(31), pages 29-56, April.
    • Handle: RePEc:mbr:jmbres:v:10:y:2017:i:31:p:29-56
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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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