Tr. Beard et al., THE DIFFUSION OF PRODUCTION PROCESSES IN THE US BANKING INDUSTRY - A FINITE MIXTURE APPROACH, Journal of banking & finance, 21(5), 1997, pp. 721-740
This article applies finite mixture distributions to the estimation of
cost functions for financial firms through time, The mixture approach
allows the estimation of multiple technologies when firms' technology
choices are unobservable. Technology switching ('diffusion') and unde
rlying technical change are simultaneously evaluated. An application t
o large samples of U.S. banks for the years 1982-1986 illustrates the
approach. Results suggest banks switch to lower cost production techno
logies when unburdened by strict branching regulations. (C) 1997 Elsev
ier Science B.V.