Estimating scale and scope economics with fourier flexible functional Form--Evidence from Taiwan's banking industry

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Title:	Estimating scale and scope economics with fourier flexible functional Form--Evidence from Taiwan's banking industry
Authors:	Huang, Tai-hsin;Wang, Mei-hui
Contributors:	淡江大學經濟學系
Date:	2002-12-18
Issue Date:	2013-05-31 11:30:34 (UTC+8)
Publisher:	Richmond: Wiley-Blackwell Publishing Asia
Abstract:	In this study the scale and scope economies for Taiwan's banking sector using panel data from 22 domestic banks for the period 198146A97 is investigated quantitatively using both a Fourier flexible functional form, first proposed by Gallant (1981, 1982), and a translog function. This study's results favour the use of the former, based on tests of regression coefficients and on estimates of various economy measures. The Fourier evidence shows that only smaller banks exhibit increasing returns to scale, while larger banks exhibit decreasing returns to scale. Conversely, the translog indicates that all the sample groups continue to enjoy economies of scale. Banks in Taiwan exhibit scope diseconomies, which suggest that sample banks should continue efforts to diversify their financial products, which in turn could substantially reduce their average costs.
Relation:	Australian Economic Papers 40(2), pp.213-231
DOI:	10.1111/1467-8454.00123
Appears in Collections:	[Graduate Institute & Department of Economics] Journal Article

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