Strategic Management of Cost Efficiencies in Networks: Cross-Country Evidence on European Branch Banking

28 Pages Posted: 12 Jul 2003

See all articles by Nayantara Hensel

Nayantara Hensel

Harvard Business School; US Naval Postgraduate School - Graduate School of Business and Public Policy

Abstract

This paper examines the role of cost efficiencies on efficient management of branch networks in the contemporary European commercial banking industry. The analysis, which could be generalised to other industries, indicates that larger banks are more likely to have heavily utilised branch networks than smaller banks and to exhibit fewer cost efficiencies from building more branches. The finding of this result within each country suggests the role of internal firm size regardless of competitive conditions. The similar cross-country finding suggests the impact of factors such as market structure/concentration levels and type of non-price competition. Larger banks can generate less income per unit asset deployed. Cross-border efficiency might be improved by greater use of banks with under-used networks by banks with over-used networks.

Suggested Citation

Hensel, Nayantara, Strategic Management of Cost Efficiencies in Networks: Cross-Country Evidence on European Branch Banking. European Financial Management, Vol. 9, pp. 333-360, September 2003. Available at SSRN: https://ssrn.com/abstract=423633

Nayantara Hensel (Contact Author)

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

US Naval Postgraduate School - Graduate School of Business and Public Policy ( email )

555 Dyer Road
Monterey, CA 93943
United States
831-656-3542 (Phone)

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