The Analysis of the Economies of Scale and Scope in Iran's Banking Industry

This paper analyzes both economy of scale and scope in Iran’s banking system, using unbalanced panel data models for 17 banks functioning in Iran's economy, spanning 1996-2009. To study economy of scale and scope in banking, various measures of economy of scale and scope were examined. Overall scale economies shows that the iran banking system have scale economies. But within-sample product-specific scale economies index results shows that almostly there are economies of scale in all of the banking activityonly in private banks. Also within-sample overall scope economies is positive and shows that there is economy of scope in iran banking system. wpscope index shows that there are economies of scope in loan, deposite and off balance sheet activity only in private banks and investment activity in oll banks.