Do consumers pay for one-stop banking? Evidence from an alternative revenue function

In providing financial services jointly, banks may reduce costs due to complementarities in production (cost economies of scope) or raise revenues from complementarities in consumption (revenue economies of scope). Cost economies of scope between bank deposits and loans have been found to be small. Revenue economies of scope are investigated here for the first time and found to be insignificant over 1978-1990 for both small and large banks and for those on or off the revenue-efficient frontier. The lack of complementarities between deposits and loans-where benefits are most likely to occur-suggests that claims of important synergies from an expansion of banking powers be taken with caution.