Cost Efficiency Characteristics of British Retail Banks

In this article the cost efficiency characteristics of the British retail-banking sector are investigated. Distribution-free cost efficiency, economies of scale, economies of scope and cost complementarities are all measured. The study employs a one way fixed effects model with a translog specification of productive technology. Both 'production' and 'intermediation' models of bank production are employed and contrasted. Overall, increasing and a low level of dispersion of cost efficiency are observed in this most important commercial sector.