Does Size Matter? Scale and Scope Economies of German Investment Management Companies

Schmalenbach Business Review, Vol. 65, April 2013, pp. 137-172

36 Pages Posted: 17 Sep 2013 Last revised: 10 Oct 2013

See all articles by Alexander Schaefer

Alexander Schaefer

Allianz SE - Allianz Global Investors Europe

Raimond Maurer

Goethe University Frankfurt

Date Written: 2013

Abstract

Standard measures of economies of scale and scope show that size does matter for German investment management companies. The average investment management company faces an increase in costs of 0.71% for a 1% increase in assets under management. Small to mid-sized companies in our example exhibit statistically significant scale economies. These economies of scale show a size trend. Furthermore, there is empirical evidence of economies of scope between retail and institutional funds, but the cost savings are greater for large investment management companies. Economies of scope also exhibit a size trend, i.e. larger companies show fewer scope economies.

Keywords: economies of scale, economies of scope, fixed-effects model, investment management companies, mutual funds

JEL Classification: C23, D24, G23, L25

Suggested Citation

Schaefer, Alexander and Maurer, Raimond, Does Size Matter? Scale and Scope Economies of German Investment Management Companies (2013). Schmalenbach Business Review, Vol. 65, April 2013, pp. 137-172, Available at SSRN: https://ssrn.com/abstract=2327083

Alexander Schaefer (Contact Author)

Allianz SE - Allianz Global Investors Europe ( email )

Seidlstr. 24 - 24a
Munich, 80335
Germany

Raimond Maurer

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

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