01032pab a2200145 454500008004000000100001700040245006800057260000900125300001100134362000800145520065600153650001800809650001000827773004900837180718b1998   xxu||||| |||| 00| 0 eng d  aDas, Abhiman  aPortfolio risks and scale economies in banking: the Indian case  c1998  ap.3-12  aJul  aThis article examines the impact of portfolio risk, as measured by the asset quality, on bank costs and scale economy estimates in the context of Indian public sector banks by using a translog cost function approach. It is proved that banks with poor loan quality will have higher costs, but the direct impact of loan quality on bank costs appears to be small. Loan quality also affects significantly the translog cost function and scale economy estimates. Diseconomies of scale are likely to exist only for very large banks (deposit size > Rs.20000 crore) and this is more pronounced for banks which have high non-performing loan ratios. - Reproduced  aBanks - India  aBanks  aInternational Journal of Development Banking