This thesis aims to study cost efficiency of universal banking by using the Smooth Transition Regression Model which illustrates cost structure based on Universal-Bank Technology and Deposit-Loan Technology. Quarterly data of 9 banks in Thailand from 2000 to 2007 are utilized. The results show that, first, coefficients of universal banking technology cost are constant over time and against our hypothesis. Second, the activity expansions through increases in the non-traditional activities and loans generate economies of scope and scale. Third, cost efficiency in Thai banking system increases over time. Finally, Krung Thai Bank (KTB) and Kasikorn Bank (KBANK) show relatively the most improvement in cost efficiency from their expansion of the non-interest income activities.