We examine pure no-load funds over a 5-year period. For equity funds, trading activity is negatively related to returns. Expense ratios are not significantly related to returns. Potential capital gains exposure and tax cost ratio are positively related to return. For fixed income funds, trading activity is positively related to return. Expense ratios and tax cost ratios are negatively related to returns. Mutual funds exhibit economies of scale and managers experience scale and scope economies. The individual investor is better off in a large fund that is a member of a large fund family.
The January 1st, 1995, General Agreement on Trade in Services (GATS), which entered into force in March 1999, is intended to bring about complete liberalization of international trade in all services, the largest and fastest growing component of such trade. This includes the financial services sector. Financial liberalization can generate a number of benefits, including services specialization, economies of scope, economies of scale in technology acquisition, a reduction of systemic risk, and improved risk management. However, in the case of small island developing countries, as with those in the Caribbean, a number of risks are evident, including adverse selection, increased moral hazard, and decreasing loan quality. This research focuses upon the nature of the financial policy framewo...
A significant number of carriers, analysts and consultants speak broadly about the importance of economies in the insurance industry. However, a more detailed, thoughtful analysis indicates that value creation from economies is elusive at best. An analysis of the 60 largest life transactions over the past six years found that insurers pursuing mergers and acquisitions for the purpose of scale economies achieved the highest immediate share returns within 10 days of the M&A announcement, more than 2% relative to other objectives. However, over the long-term, these same insurers destroyed value: -15% relative to the other carriers in the study. The analysis also strongly suggests that size doesn't lead to superior performance along any metric - total sha...
Deregulation, most recently in the form of the Gramm-Leach-Bliley Act (GLBA) of 1999, and earlier in the form of the Reigle-Neal Act of 1994, has lifted interstate branching restrictions and dismantled many of the statutory limits on financial consolidation that were the heart of the Glass-Steagall Act of 1933. GLBA has created a new type of bank holding company -- the financial holding company, where activities such as merchant banking and insurance underwriting, which previously were not permissible for banking firms, are now allowed -- and named the Federal Reserve as umbrella supervisor. The role of the umbrella supervisor is to piece together a consolidated picture of the financial holding company's risks -- including management's ability to understand and manage those risks. An ec...
... risk information, coupled with economies of scale in information storage, retrieval, and pr...-suggests that there may be economies of scope between central banking functions and umbrella sup...
NEW YORK, May 28 /PRNewswire/ -- The push by financial services and insurance companies to establish new offshore operations leveled off in 2009. At the same time, firms seeking cost reductions show greater interest in contracting with large international service providers to benefit from their economies of scale and scope, rather than creating fully owned offshore subsidiaries. These are among the findings of Financial Services Offshoring: Moving Toward Fewer Captives and Global Cost Competitiveness released today, which is based on the fifth annual study on offshoring trends by the Center for International Business Education and Research's (CIBER) Offshoring Research Network (ORN) at Duke University's Fuqua School of Business and The Conference Board. The study is part of a wider rese...
... station ownership in order to produce "economies of scale that significantly reduce overhead." (81)... product." (167) In addition, "economies of scope (168) are achieved when a company produces multipl...
Japanese securities firms were operating under new circumstances after the Japanese version of the Financial Big Bang was implemented. This paper examines structural changes in the Japanese securities industry by comparing the economies of scale and scope between 1998 and 2002. In particular, we focus on the online securities firms that have appeared in recent years and verify their differences from the existing ones or the impact of deregulation. This is undertaken by employing the generalized translog cost function, which can take zero outputs into consideration. The findings suggest that scale economies were observed for the online securities firms as a whole. Further, product-specific economies of scale for brokerage commissions were observed for the online securities firms. However...
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