Accession Number : AD0616153

Title :   ECONOMIES OF SCALE IN THE SAVINGS AND LOAN INDUSTRY,

Corporate Author : CALIFORNIA UNIV LOS ANGELES

Personal Author(s) : Brigham,Eugene F.

Report Date : 1964

Pagination or Media Count : 17

Abstract : This paper presents the results of a detailed cost study of two cross-sectional samples of California savings associations. The first includes practically all associations in the state and examines a relatively large number of cost-determining variables, but the data are restricted to the year 1961. The second has a time dimension, since it includes seven sets of cross-sectional observations from 1956 through 1962, but the data are for only state-chartered associations operating in Los Angeles County. Only associations that have been operating for two or more years are used in the regression analysis. Conclusions and qualifications: The savings and loan industry does not appear to be subject to very significant economies of scale. The present indicates that internal economies largely disappear when new and atypical associations are removed from the sample, and when additional cost-determining variables are introduced into the model. This lack of importance of scale economies seems to hold regardless of whether operating efficiency is measured by costs, returns or assets, or profits, and regardless of whether or not public holding company affiliates are treated as one institution. There is some evidence of economies of scale in the savings and loan industry, but these size-generated efficiencies do not appear to be very important. Until internal economies are more visibly demonstrated, public policies based on the assumption that they exist in fact are possibly misguided.

Descriptors :   (*BANKING, COSTS), ECONOMICS, STATISTICAL ANALYSIS, CALIFORNIA, TABLES(DATA)

Distribution Statement : APPROVED FOR PUBLIC RELEASE