Accounting

Here is the link source of economies of scale for credit unions ,

http://www.frbsf.org/economic-research/publications/economic-letter/2005/november/economies-of-scale-and-continuing-consolidation-of-credit-unions/

How does each set of cirumstances listed below lead to Economies of scale?

1The federal government passed new regulations applying to credit unions in the 2000's

2 Larger credit unions have more diversified loans than smaller credit unions. 

Whether depository institutions can achieve economies of scale, that is, lower their average costs by increasing their sizes, has been a subject of great interest and importance to economists, regulators, and depository institutions themselves. Deregulation has allowed banks, thrifts, and credit unions to increase their size—and, thereby, to reap whatever economies of scale have long been available to larger depositories—by easing restrictions on their abilities to acquire other financial institutions and to operate over broader geographic areas. In addition, technological advances in information processing and in financial practices may have further added to depositories’ economies of scale. The resulting gains in efficiency can benefit the owners and customers of depositories specifically and the economy generally.

Economies of scale also provide powerful incentives for industry consolidation, as firms grow and merge in order to lower their costs and as smaller firms find it more difficult to continue competing with their growing, increasingly efficient competitors. Indeed, as technologies advanced and deregulation proceeded, the total number of depositories fell from about 40,000 in 1980 to less than 20,000 in 2004. And, over the same period, the average asset size (in 2004 dollars) of banks quadrupled, while that of credit unions grew tenfold.

However, the overall evidence in favor of the practical importance of economies of scale in banking has, at best, been mixed. As Kwan and Wilcox (2002) noted,...