16-85 Why has empirical evidence on economies of scale and scope been so contradictory?
A)Data on bank costs are unavailable.
B)Efficiency may be related to overall market conditions.
C)Efficiency may be related to non-quantifiable variables such as managerial ability.
D)Neither the intermediation nor the production approach conform to reality.
E)The methodology to detect economies of scale and scope are still very rudimentary.

Question

Quizplus · Accepted Answer

Empirical evidence on economies of scale and scope has been contradictory because efficiency may be related to non-quantifiable variables such as managerial ability, which may vary widely across firms and affect their performance. Despite efforts to control for these variables, measuring and isolating them remains a challenge. Other factors such as technological change, regulatory policies, and market structure can also influence economies of scale and scope, making it difficult to establish causal links.

16-85 Why Has Empirical Evidence on Economies of Scale and Scope