Affiliation:
1. RBI Endowment Unit, Faculty of Commerce, The Maharaja Sayajirao University of Baroda, Vadodara, Gujarat, India
Abstract
The present study attempts to analyse the cost analysis of the banking industry with special focus on optimum size of a bank. It studies the cost structure, economies/diseconomies as well as the optimum size of public sector banks for the period 1991–1992 to 2013–2014. Economies of scale relating to 26 public sector banks are worked out for selected years. The large banks operated at a scale, reaping economies in all the years, the exception being the year 2004–2005 achieving position of the minimum AC—. For the small banks, there are economies of scale in all the selected years. Both the banks groups did not show diseconomies with respect to total cost, even though there were diseconomies associated with other individual cost items. The minimum efficient size (MES) was attained by all the public sector banks in each of the years selected. JEL codes: D24, D210, D220, D240, D240, D250