Related to the operation of a bank in the
As a rule, there is an increase in sales. However, this only has a positive effect on profits if the additional costs incurred as a result of the growth are lower than the increase in sales, taking into account time and risk preferences. This in turn can be the case if existing and/or additional resources can be better utilized for existing directions of use (economics of scale: reduction in costs per unit resulting from increased production, realized through operational efficiencies) and/or for new directions of use (economics of scope: the reduction in costs per unit through the production of a broader variety of goods). – Experience has shown that the realization of such “economics” is often hindered by the fact that the coordination costs incurred in the growth process are too high and, as a rule, insufficiently planned for. – See assertion strategy, financial market, growth importance, Gibrat rule, Penrose theorem.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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