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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