Event Title

Economy and Diseconomy of Scale in Microeconomy Case study: Procredit Bank

Session

Management, Business and Economics

Description

The purpose of the research is to present the challenges and benefits of alternatives in the banking system in Kosovo. The research aims to show how vital investment selection is for developing a business where this development should address the business in economies of scale rather than increasing costs. The research methods used to conduct the research are secondary methods with quantitative data, because we have considered the high reliability of the data from the banking sector. A total of 574 data were collected from 24 different variables over 24 time periods, descriptive statistical methods, correlation and regression were used to present the results. The research explains the types and sources of economics of scale, then reviews literature from 66 different publications on the topic. The research results are the verification of 7 scientific hypotheses, they are H1- Financial institutions focus on profit regardless of deposit sensitivity. H2- Procredit Bank as a German bank is characterized by the diseconomy of scale. H3- Commercial banks have no positive relationship between credit growth and return on equity. H4- Commercial banks increase the amount of risk-free investments by increasing deposits. H5- Increased equity by commercial banks increases the amount of risk-free investments. H6- Economies of scale are not the only way to reduce the share of fixed costs in profit margins. H7- With increasing time deposits from customers, net income increases, despite the fact that the bank pays more interest to customers.

Keywords:

Sources, Economy, Diseconomy, Scale, Risk-free, Costs, Profit

Session Chair

Arta Mulliqi

Session Co-Chair

Muhamet Gërvalla

Proceedings Editor

Edmond Hajrizi

ISBN

978-9951-550-19-2

Location

Pristina, Kosovo

Start Date

26-10-2019 3:30 PM

End Date

26-10-2019 5:00 PM

DOI

10.33107/ubt-ic.2019.371

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Oct 26th, 3:30 PM Oct 26th, 5:00 PM

Economy and Diseconomy of Scale in Microeconomy Case study: Procredit Bank

Pristina, Kosovo

The purpose of the research is to present the challenges and benefits of alternatives in the banking system in Kosovo. The research aims to show how vital investment selection is for developing a business where this development should address the business in economies of scale rather than increasing costs. The research methods used to conduct the research are secondary methods with quantitative data, because we have considered the high reliability of the data from the banking sector. A total of 574 data were collected from 24 different variables over 24 time periods, descriptive statistical methods, correlation and regression were used to present the results. The research explains the types and sources of economics of scale, then reviews literature from 66 different publications on the topic. The research results are the verification of 7 scientific hypotheses, they are H1- Financial institutions focus on profit regardless of deposit sensitivity. H2- Procredit Bank as a German bank is characterized by the diseconomy of scale. H3- Commercial banks have no positive relationship between credit growth and return on equity. H4- Commercial banks increase the amount of risk-free investments by increasing deposits. H5- Increased equity by commercial banks increases the amount of risk-free investments. H6- Economies of scale are not the only way to reduce the share of fixed costs in profit margins. H7- With increasing time deposits from customers, net income increases, despite the fact that the bank pays more interest to customers.