Changes in Bank Costing: Capacity-Estimated Costing Based on Holistic Approach

Abstract

By conducting case studies of Japanese Banks that reviewed its ABC, the following three characteristics were revealed. First, Bank costing has changed from consumption-based to capacity-based. Second, the actual allocation calculation based on Bank ABC has changed to resource-aggregated costing based on estimated capacity. The last feature is that the elemental reductionist approach of Bank ABC has been replaced by the holistic approach of costing. To analyze the factors that led to this change, we analyzed the trends in loans, loan interest rates, and loan expense ratios of all regional Banks during the 2000s and 2010s. As a result, it was found that the changes in market interest rates forced the Banks to change their cost accounting from the cost reduction approach to the holistic cost recovery approach. Finally, it was pointed out that similar changes may well occur in the cost accounting of other industries as in the case of Banks.