Mergers in the banking sector
A case applied to Bolivia
DOI:
https://doi.org/10.35319/lajed.202543538Keywords:
Banking sector, cost function, efficiency measures, mergers, Scale and Scope economies.Abstract
Given the current dynamics of the banking industry, where alliances between agents are more frequently observed, either by size or portfolio specialization, this paper tests the presence of economies of scale, scope, and cost subadditivity for the Bolivian banking sector to determine whether there are technical grounds to justify mergers. Using the technique of seemingly unrelated regression, cost functions are estimated according to bank size and for the industry, considering the case of commercial banks. The results suggest that there are technical foundations that support the feasibility of mergers in the Bolivian baking sector due to the presence of conglomerate economies in this industry.
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