Economies of scale in the demand for money by firms in China

Abstract

This empirical study investigates the magnitude of economies of scale in the demand for money by firms in China. A panel threshold model is estimated. It is found that the estimated elasticity of scale in small firms is lower than that in large firms, indicating that small firms have larger economies of scale in demand for money in China.

Keywords:

• economies of scale
• panel threshold model
• demand for money at firm level

JEL Classification:

• E41
• E31
• E37

Notes

¹ However, they found no evidence of such scale economies for the United Kingdom and Spain.

² For detailed interpretation of the threshold model, one is referred to Hansen (1999).

Additional information

Funding

We would like to express our sincere gratitude to the National Natural Science Foundation of China [71201174, 71002056] and Construction of Theory ‘Yuejun’ Foundation [LLYJ1313] for its financial support.