This study estimates the coefficients of the translog cost fuction of two outputs and four inputs with cross section and time series data of Korean commercial banks during the period of 1985 to 1997. The results indicate economies of scale are increasing for loans and securities, slight diseconomies of scale for non-interest income yielding services, and inelastic demands for factor inputs. Labor and business fixed assets are highly substitutes. Domestic deposits are estimated to be substitutes of labor and business fixed assets at a moderate level. Foreign deposits have a very low level of complementary relationship with each of labor, business fixed assets, and domestic deposits. During the period of 1985 to 1997, Korean banks’ cost efficiency is estimated to be 0.8. A significant rise in the return to scale is made from 1985 to 1997. No significant reduction is achieved in the inefficiency in banking. This may suggest that the financial decontrols and liberalization policy of the government contributed to the growth in bank activity and provided an environment favorable for more efficient operations in banking.