Economies of scale and technological development in securities depository and settlement systems

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Title: Economies of scale and technological development in securities depository and settlement systems
Author: Schmiedel, Heiko ; Malkamäki, Markku ; Tarkka, Juha
Organization: Suomen Pankki
Series: Suomen Pankin keskustelualoitteita
Series number: 26/2002
Year of publication: 2002
Publication date: 2.10.2002
Published in: Published in Journal of Banking & Finance, 30, 6, June 2006: 1783-1806
Pages: 33 s.
Keywords: kaupankäynti; arvopaperit; tehokkuus; clearing/settlement; kehitys; teknologinen kehitys; skaalaedut; arvopapereiden selvitys
JEL: G20; F36; L22; O33
Abstract: The paper investigates the existence and extent of economies of scale in depository and settlement systems.Evidence from 16 settlement institutions across different regions for the years 1993-2000 indicates the existence of significant economies of scale.The degree of such economies, however, differs by size of settlement institution and region.While smaller settlement service providers reveal high potential of economies of scale, larger institutions show an increasing trend of cost effectiveness. Clearing and settlement systems in countries in Europe and Asia report substantially larger economies of scale than those of the US system.European cross-border settlement seems to be more cost intensive than that on a domestic level, reflecting chiefly complexities of EU international securities settlement and differences in the scope of international settlement services providers.The evidence also reveals that investments in implementing new systems and upgrades of settlement technology continuously improved cost effectiveness over the sample period. Key words: securities settlement, economies of scale, technological progress JEL classification numbers: D4, G20, F36, L22, O33
Note: Ilmestynyt myös Journal of banking & finance 2006 ; 30 ; 6.

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