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Scale Economies, Cost Efficiencies, and Technological Change in Federal Reserve Payments, Financial Services Working Paper Series No. 01-96

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Scale Economies, Cost Efficiencies, and Technological Change in Federal Reserve Payments, Financial Services Working Paper Series No. 01-96

DATE: August 1996

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ABSTRACT: This paper uses a stochastic cost frontier to examine the scale economies, cost efficiencies, and technological change of three payment instruments--check, automated clearinghouse (ACH) transfers, and Fedwire processing--provided by the Federal Reserve over the period 1990-94. We find evidence of substantial scale economies and cost inefficiencies in the ACH and Fedwire services. Check processing also exhibits substantial cost inefficiency, but constant returns to scale. Technological progress is found to be sizable for ACH and Fedwire; check processing is found to have experienced technological "regress," probably because of a decrease in processing volume over the sample period.

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Bauer, Paul W. and Ferrier, Gary D. "Scale Economies, Cost Efficiencies, and Technological Change in Federal Reserve Payments, Financial Services Working Paper Series No. 01-96," Financial Services Working Paper Series (Federal Reserve Bank of Cleveland) (August 1996). https://fraser.stlouisfed.org/title/6010/item/583199, accessed on May 8, 2024.

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PLACE: Cleveland

DIGITAL COPY SOURCE: Federal Reserve Bank of Cleveland

SUBJECTS: THEMES: CLASSIFICATION:
  • lcc: HC108.F31 C583 no.01-96
IDENTIFIERS:
  • repec: fip:fedcfs:96-01
  • oclc: 36831288

RIGHTS: In Copyright (InC)

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