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Seoul Journal of Economics - Vol. 27 , No. 4
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Seoul Journal of Economics - Vol. 27, No. 4, pp. 445-467
Abbreviation: SJE
ISSN: 1225-0279 (Print)
Print publication date 30 Nov 2014
Received 17 Jan 2014 Revised 23 Sep 2014 Accepted 24 Sep 2014

Do Larger Brokerage Firms Enjoy Larger Economies of Scale and Scope?
Dong-Gull Lee ; Jabonn Kim ; Hyounggoo Kang
Visiting Professor, Dong Kook University, Tel: 02-2260-3929 (lee.dong.gull@gmail.com)
Research Fellow, Korea Institute of Finance, Tel: 02-3705-6277, Fax: 02-3705-6309 (jbkim@kif.re.kr)
Assistant Professor, Hanyang University, Tel: 02-2220-2883, Fax: 02-2220-0249 (hyoung.kang@hanyang.ac.kr)

JEL Classification: G2

Abstract

This study examined whether firm size determines the economies of scale and scope of securities firms. Results showed that the firms broadly achieved economies of scale and substantially benefitted from the economies of scope in the Korean brokerage sector. In particular, greater economies of scale were present in large firms. Overall, a great possibility and necessity of industrial restructuring through M&A among brokerage firms exist in the Korean brokerage sector.

Keywords: Brokerage firm, Economies of scale, Economies of scope, Cost function
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