AN EMPIRICAL EXAMINATION OF THE COST FFICIENCIES IN THE THRIFTS AND MORTGAGE FINANCE COMPANIES

D. K. Malhotra
Raymond Poteau
Philadelphia University
ABSTRACT
This study evaluates cost efficiencies of the U.S. thrift and mortgage finance companies
for the period 2007 to 2011. This study shows that total cost, total interest cost, and total non-
interest cost increases less than proportionately to increases in assets, which points to economies
of scale with reference to assets. The study also finds that total cost, total interest cost, and total
non-interest cost is negatively related to size as measured by total deposits and there are cost
efficiencies with regard to size as measured by total deposits of thrifts and mortgage finance
companies. Furthermore, there are economies of scale with respect to total loans made by thrifts
and mortgage finance companies, because the larger the amount of loans on the balance sheet, the
lower is total cost, total interest cost, and total non-interest cost.