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Working Paper
Measuring the performance of banks: theory, practice, evidence, and some policy implications
The unique capital structure of commercial banking ? funding production with demandable debt that participates in the economy?s payments system ? affects various aspects of banking. It shapes banks? comparative advantage in providing financial products and services to informationally opaque customers, their ability to diversify credit and liquidity risk, and how they are regulated, including the need to obtain a charter to operate and explicit and implicit federal guarantees of bank liabilities to reduce the probability of bank runs. These aspects of banking affect a bank?s choice of risk vs. ...
Working Paper
The translog form and declining average costs
Working Paper
Merger-related cost savings in the production of bank services
This paper utilizes a new flow measure of the true output of bank services to analyze the impact of mergers on the cost and productivity of Bank Holding Companies (BHCs) over the period 1987-1999. It shows that there are conceptual problems in the output measures used in previous studies, which may be the reason for their paradoxical findings: Bank mergers are estimated to lead to significant increases in profit, without cost savings or increases in market power. This paper also points out the problematic understanding of diversification in previous studies. To remedy these problems, this ...
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The fall and rise of the global economy
Working Paper
On estimating technical progress and returns to scale
Journal Article
Economies of scale and scope at depository financial institutions: a review of the literature
Changes in laws and regulations for the financial industry could reshape the structure of the banking industry, especially if the changes allow banks to achieve cost economies. The evidence suggests that large diversified banks have not enjoyed substantial cost advantages over smaller institutions.
Report
The role of cities: evidence from the placement of sales offices
What is the force of attraction of cities? Leading explanations include the advantages of a concentrated market and knowledge spillovers. This paper develops a model of firm location decisions in which it is possible to distinguish the importance of the concentrated-market motive from other motives, including knowledge spillovers. A key aspect of the model is that it allows for the firm to choose multiple locations. The theory is applied to study the placement of manufacturing sales offices. The implications of the concentrated-market motive are found to be a salient feature of U.S. Census ...
Journal Article
Concentration and innovation: striking a balance in deregulation
Journal Article
Opinion : Evil empire