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The Effect of Economies of Scope on Iranian Banking Sector Structure: An Application of Multi-Product Function and Multi-Level Effect Approaches

Author

Listed:
  • Mahmodpour Kamran

    (Department of Economics, Bandar Abbas Branch, Islamic Azad University, Bandar Abbas, Iran)

  • Shahiki Tash Mohammad N.

    (Faculty of Management and Economics, University of Sistan and Baluchestan, Iran)

  • Fotros Mohammad Hassan

    (Bu-Ali Sina University, Hamedan, Iran)

Abstract

This paper investigates, using a multi-product paradigm, the market structure of the Iranian banking sector to evaluate the role of scale. In so doing, we checked for economies of scope by multi-product cost function as well as the impact of potential economies on the banking sector structure including 18 banks during the period 2008–2014. The changes in Panzar-Rosse H-Statistic as a result of the variety in products reflect changes in the monopolistic power. The results show that an increase in the variety of offered products increases banks’ monopolistic power.

Suggested Citation

  • Mahmodpour Kamran & Shahiki Tash Mohammad N. & Fotros Mohammad Hassan, 2018. "The Effect of Economies of Scope on Iranian Banking Sector Structure: An Application of Multi-Product Function and Multi-Level Effect Approaches," Scientific Annals of Economics and Business, Sciendo, vol. 65(4), pages 459-475, December.
    • Handle: RePEc:vrs:aicuec:v:65:y:2018:i:4:p:459-475:n:1
    DOI: 10.2478/saeb-2018-0016
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    More about this item

    Keywords

    Iranian banking sector; variety-based economies; multi-level model; market structure; the generalized Panzar-Rosse model;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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