Economies of scale and scope in banking: Effects of government intervention, corporate strategy and market power

The financial crisis and ensuing policy responses have made the question of economies of scale and scope in the banking sector as topical as ever. This dissertation estimates economies of scale and scope in the banking sector and discusses the role of government intervention, corporate strategy and market power. Overall, economies of scale are found to be positive while mixed evidence is found on the existence of economies of scope. Implicit governmental subsidies play a role but do not fully explain economies of scale and scope. Furthermore, a case study on ABN AMRO investigates the role of corporate strategy in the creation of economies of scale and scope and discusses the role of business level incentives. And an investigation into the Dutch mortgage market shows that the presence of large banks in concentrated markets can adversely affect the impact of policy proposals that address competition.