The Evolution of Scope Economies in European Banking Industry

The global financial crisis has raised new policy debates regarding the bank's size, especially among the largest banks. Using nonparametric, local-linear methods, we provide new estimates of scope economies in cost, revenue, and profit for European commercial banks during 2000–2020. Our findings reveal that a substantial proportion of banks demonstrated economies of scope (EOS) annually: approximately 45% in cost, at least 61% in revenue, and no less than 67% in profit. These findings indicate that EOS may partly account for the sustained growth and expansion of European banks during this period.