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This paper studies the profit efficiency of a sample of large U.S. commercial banks and explores how this performance varies with selected measures of bank risk reflecting aspects of credit risk, liquidity risk, and insolvency risk. We use a standard profit function and the stochastic frontier approach, and compare two standard functional forms – Cobb‐Douglas and translog – to assess the tradeoff between precision and parsimony. We find that profit efficiency is sensitive to credit risk and insolvency risk but not to liquidity risk or to the mix of loan products.

In these times of no‐growth budgets and escalating service demands, the formation of partnerships between all types of higher education institutions — both public and private — is now a recognized survival strategy. Details the budget development in a partnership created through an agreement between a private distance‐education institution, Walden University, and a public research institution library, Indiana University Libraries. For the distance‐education university, the agreement's main advantage is a uniform program of access and delivery of research resources to its students during summer sessions held on the Indiana University Bloomington campus. For the research university library, the agreement offers the opportunity to develop an in‐house pilot program, with external funding, for offering distance education library support to its own students. Based on their experience of mutual benefit over the past three years, Walden University and Indiana University Libraries' administrators have transformed the goal of their inter‐institutional agreement from protection to proaction.

The purpose of this paper is to provide the first empirical study of external economies (agglomeration economies) in the banking industry.

The author extends a standard specification of banking costs to control for community and market characteristics.

Banks' costs are a decreasing function of the number of rival banks and an increasing function of market population. Estimated magnitudes of these effects, modest at the bank level, are large in aggregate. Multimarket operation of rival banks is also important.

These findings suggest a previously unrecognized cost‐side benefit of structure‐based antitrust policies, and have additional implications for public policy toward banking structure, as well as calling for a re‐interpretation of previous studies of scale economies, cost efficiency, and price‐cost margins in banking.

This article investigates concentration, efficiency, and profitability of commercial banks operating in Saudi Arabia, which is considering acceding to the World Trade Organisation whose rules on financial services liberalisation could pose a competitive challenge to local banks. We use regression analysis to investigate the underlying determinants of Saudi bank concentration, efficiency, and profitability. The significance of the study stems from the conventional premise that highly concentrated banking or credit market introduces inefficiencies that would harm firms’ access to credit thus hindering economic growth. If banks were found to be highly concentrated and hence inefficient, then the relevant policy question that should be addressed by Saudi Arabian policy makers is what should be done to alleviate the situation. Empirical results show that Saudi banking market is highly concentrated, and healthy competition through the Saudi adoption of corrective measures would ease the problem. The Saudi government may like to consider concurrently joining the WTO, and allow non‐banking institutions to enter into brokerage business, offer financial products and services (investment banking, brokerage, and portfolio management), and compete with commercial banks through fair participation in auctioning of government securities.

State and local public pension plans cover a significant number of workers and represent a major component of the nation's retirement system. This study examined the size‐administrative cost relationship of public pension plans to ascertain whether cost savings can be realized by increasing pension plan size. The results indicated that while the consolidation of smaller plans will generate administrative cost savings, the consolidation of larger plans will generate savings only up to an optimal membership size at which point cost savings will end. In addition, optimal size was found to differ for active and beneficiary members indicating that membership composition needs to be considered when assessing the potential for cost savings.

Libraries are businesses. Two issues ago, The Bottom Line (TBL) included an article by American Library Association president‐elect Betty Turock, entitled “Three business trends that strengthen library operations”. These trends involved: creating organizations in which innovation can flourish, creating organizations which prepare and live by strategic plans, and creating organizations which participate in the national political arena. In her article, Turock asked two critical questions: “How do we position our organizations to thrive, not merely survive?” and “How do we cope with the inevitable barrage of changes that confront us and still keep our organizations viable?”