Commercial banks comprise about two-thirds of the total financial resources of the country’s banking system. Utilizing samples of domestic commercial banks, this paper shows that a majority of the banks studied have either completely or nearly exhausted their economies of scale. While economies of scope are found to be an alternative policy, the paper indicates that banks tend to lose if they produce all possible financial products. In view of these results, the paper shares a number of incisive thoughts.
An Analysis of the Behavior of the Commercial Banks
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