The Effect of Economies of Scope on Iranian Banking Sector Structure: An Application of Multi-Product Function and Multi-Level Effect Approaches
DOI:
https://doi.org/10.2478/saeb-2018-0016Keywords:
Iranian banking sector, variety-based economies, multi-level model, market structure, the generalized Panzar-Rosse modelAbstract
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.
JEL Codes - L1; G21; F36
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