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Size, Growth, and Variance among the World's Largest Non-merged Banks

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  • Daphne Hameeteman
  • Bert Scholtens

Abstract

This paper analyses growth, size, and variance of the capital, assets, and pre-tax profits of large international banks during 1987-97.We test hypotheses on whether size matters. It turns out that there is an inverse relationship between the amount of bank capital, assets, and profits and the growth rate of these items.This is in line with the findings for US banks in the pre-BrettonWoods era. Furthermore, we did not find, in contrast with Tschoegl's observations for international banks in the 1970s, a negative relationship between the size of large banks and the variability of growth in capital, assets, or profits. We conclude that size is not a self-sustaining attribute of international banks.

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  • Daphne Hameeteman & Bert Scholtens, 2000. "Size, Growth, and Variance among the World's Largest Non-merged Banks," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 7(3), pages 313-323.
    • Handle: RePEc:taf:ijecbs:v:7:y:2000:i:3:p:313-323
    DOI: 10.1080/13571510050197212
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    References listed on IDEAS

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    1. Jalal D. Akhavein & Allen N. Berger & David B. Humphrey, "undated". "The Effects of Megamergers on Efficiency and Prices: Evidence from a Bank Profit Function," Finance and Economics Discussion Series 1997-09, Board of Governors of the Federal Reserve System (U.S.), revised 10 Dec 2019.
    2. Berger, Allen N. & Humphrey, David B., 1997. "Efficiency of financial institutions: International survey and directions for future research," European Journal of Operational Research, Elsevier, vol. 98(2), pages 175-212, April.
    3. Berger, Allen N. & Demsetz, Rebecca S. & Strahan, Philip E., 1999. "The consolidation of the financial services industry: Causes, consequences, and implications for the future," Journal of Banking & Finance, Elsevier, vol. 23(2-4), pages 135-194, February.
    4. Tschoegl, Adrian E, 1983. "Size, Growth, and Transnationality among the World's Largest Banks," The Journal of Business, University of Chicago Press, vol. 56(2), pages 187-201, April.
    5. Doris Neu Berger, 1998. "Industrial Organization of Banking: A Review," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 5(1), pages 97-118.
    6. Rhoades, Stephen A & Yeats, Alexander J, 1974. "Growth, Consolidation and Mergers in Banking," Journal of Finance, American Finance Association, vol. 29(5), pages 1397-1405, December.
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    Cited by:

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    2. C. T. Shehzad & J. De Haan & B. Scholtens, 2013. "The relationship between size, growth and profitability of commercial banks," Applied Economics, Taylor & Francis Journals, vol. 45(13), pages 1751-1765, May.
    3. John Goddard & John O. S. Wilson, 2005. "US Credit Unions: An Empirical Investigation of Size, Age and Growth," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 76(3), pages 375-406, September.

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