Economics of Scale in the Retail Superannuation Funds in Australia

19 Pages Posted: 19 Jun 2002

See all articles by Davinder K. Malhotra

Davinder K. Malhotra

Thomas Jefferson University

Vijaya B. Marisetty

RMIT University; Financial Research Network (FIRN)

Mohammed Ariff

Monash University - Department of Accounting

Date Written: August 2001

Abstract

Using a translog cost function, we examine the extent to which economies of scale exist for retail superannuation funds in Australia for 1999 and 2000. We find that the average cost elasticity for Australian retail superannuation funds is equal to 1.0. This means that percentages cost increases are equal to the same percentage increases in assets for the retail superannuation funds in general. Variations in fund size and fund objective show variations in cost elasticities of funds. We find economies of scale for funds greater than $30 million in size. Average cost elasticity also shows economies of scale for domestic debt and multisector funds.

Keywords: Economies of scale, fund expenses, fund management, Australian funds

JEL Classification: G23, B41

Suggested Citation

Malhotra, Davinder K. and Marisetty, Vijaya B. and Ariff, Mohammed, Economics of Scale in the Retail Superannuation Funds in Australia (August 2001). EFMA 2002 London Meetings. Available at SSRN: https://ssrn.com/abstract=314395 or http://dx.doi.org/10.2139/ssrn.314395

Davinder K. Malhotra (Contact Author)

Thomas Jefferson University ( email )

Schoolhouse Lane and Henry Avenue
School of Business Administration
Philadelphia, PA 19144
United States

Vijaya B. Marisetty

RMIT University ( email )

Business
Level 12, 239 Bourke Street
Melbourne, Victoria 3000
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Mohammed Ariff

Monash University - Department of Accounting ( email )

Building 11E
Clayton, Victoria 3800
Australia

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