Scope Economies in Banking: The Hybrid Box‐Cox Function

Abstract

Abstract This paper provides evidence on scope economies in banking using the Box‐Cox hybrid functional form on five products and two inputs. A factor demand equation augmented system of equations in estimated using the iterative Zellner technique. Strict Willig‐type scope estimates indicate that there are scope diseconomies in the sample of banks in the Functional Cost Analysis (FCA) Program data for 1983.