Active cost management in Argentinean banks: an empirical test of sticky costs

This study provides a test and analyses the existence and magnitude of sticky costs in an emerging economy's financial sector. The results use data from Argentinean banks between 2005 and 2010 (total costs increase 0.55% for every 1% total income increase and decrease only 0.13% per 1% total income decrease) and show that the sticky cost magnitude is similar but more pronounced than those documented in previous studies, both in central economies (Anderson et al., 2003; Calleja et al., 2006) and in emerging economies (Ribeiro de Medeiros and de Souza Costa, 2004). This kind of analysis' absence from Latin-American companies' financial sectors, particularly those in Argentina, is one of the main characteristics of this study. Its main contribution to the literature is the topic's novelty and its empirical validation in a G-20 emerging economy's financial sector.