Does Foreign Bank Penetration Affect the Risk of Domestic Banks? Evidence from Emerging Economies

2017 ◽  
Author(s):  
Minghua Chen ◽  
Ji Wu ◽  
Bang Nam Jeon ◽  
Rui Wang
Keyword(s):  
Emerging Economies ◽  
Foreign Bank ◽  
Domestic Banks

Does foreign bank penetration affect the risk of domestic banks? Evidence from emerging economies

2017 ◽  
Vol 31 ◽  
pp. 45-61 ◽  
Author(s):  
Ji Wu ◽  
Minghua Chen ◽  
Bang Nam Jeon ◽  
Rui Wang
Keyword(s):  
Emerging Economies ◽  
Foreign Bank ◽  
Domestic Banks

THE FOREIGN BANK EFFECT ON VALUE CREATION IN COMMERCIAL BANKS INCORPORATED IN THAILAND

2008 ◽  
Vol 53 (02) ◽  
pp. 215-244
Author(s):  
CHANTAL HERBERHOLZ
Keyword(s):  
Performance Measures ◽  
Commercial Banks ◽  
Economic Value ◽  
Value Added ◽  
Foreign Bank ◽  
Level Data ◽  
Beneficial Impact ◽  
Domestic Banks ◽  
The Cost ◽  
Traditional Performance

Using quarterly bank-level data over the period 1997–2005, this paper examines the effect of foreign bank presence on commercial banks incorporated in Thailand, using traditional and value-based performance measures as indicators of the degree of competition and proxies for the efficiency in the provision of banking services. The findings suggest that foreign bank presence is not only beneficial in terms of traditional performance measures, but also in terms of economic profit. The results with respect to economic value added and cash value added, however, cast some doubt over the presumed benefits of opening up, underlining the importance of using a proxy that considers the cost of equity and departs from standard accounting principles. Furthermore, the results indicate that foreign entry through the acquisition of domestic banks appears to have a stronger and more beneficial impact on locally incorporated banks than through the establishment of branches, with majority ownership by a foreign blockholder being of importance.

scholarly journals Foreign bank entry impacted domestic-owned banks in Ghana from 1975 to 2008

2013 ◽  
Vol 2 (4) ◽  
pp. 40-53
Author(s):  
Nsiah Acheampong
Keyword(s):  
Financial Performance ◽  
Commercial Banks ◽  
Foreign Bank ◽  
Foreign Banks ◽  
Return On Assets ◽  
Foreign Bank Entry ◽  
Domestic Banks ◽  
Bank Entry

This article empirically examines the effects of foreign bank entry on the financial performance of Merchant Bank Ghana Limited and Ghana Commercial Banks Limited in Ghana from 1975 to 2008. The main result of the pooled regression was that foreign bank entry relatively increased domestic banks’ return on assets for the period 1992-2008; a period with a high influx of foreign banks into Ghana. This result supported the studies by Beck, Demirguc-Kunt, and Levine (2006) and Boldrin and Levine (2009) that found that foreign bank entry enhanced domestic banks profitability margins. The presence of foreign-owned banks was not detrimental to the financial performance of the domestic-owned banks in Ghana.

scholarly journals The Analysis of Corporate Governance on Non-Performing Loans: Evidence from Indonesia

2021 ◽  
Vol 1 (1) ◽  
pp. 1-23
Author(s):  
Jovita Ramadhanti ◽  
Ivan Destian Butar Butar ◽  
Christian Haposan Pangaribuan
Keyword(s):  
Corporate Governance ◽  
Banking Sector ◽  
Stock Exchange ◽  
Foreign Bank ◽  
Board Independence ◽  
Regression Result ◽  
Board Size ◽  
Bank Ownership ◽  
Domestic Banks ◽  
The Impact

Objective – This study aims to know the impact of corporate governance mechanisms on the non-performing loan of a bank. This study also aims to analyze which corporate governance aspects are significant to the banks’ non-performing loans in Indonesia. Another objective of this study is to examine whether the relationship between corporate governance and non performing loan depends on bank ownership. This study’s corporate governance variables are the board size, board independence, and bank ownership category. This study focuses on the non-performing loan of the banks in Indonesia. Methodology – This study will examine 26 banks in Indonesia listed on the Indonesian Stock Exchange (IDX). It includes both foreign-owned (foreign bank) and domestic banks. The length of the period of observation is seven years, from 2012 to 2018. Panel data of these banks are analyzed using the fixed-effect regression. Findings – The regression result shows that board size and bank ownership category have no significant impact on the non-performing loan, while the board independence impacts non-performing loans negatively. Novelty – This study contributes to the academic literature, specifically on the issue of corporate governance in the banking sector. This study’s result and findings could be used as the reference for other studies and further research on the corporate governance issue. This study will also expand the literature about corporate governance in the Indonesian banking sector since there are still a limited number of studies that discussed this specific matter.

Bank lending and bank relationships in China: guanxi or commercial?

2017 ◽  
Vol 43 (4) ◽  
pp. 425-439 ◽  
Author(s):  
Wei Yin ◽  
Kent Matthews
Keyword(s):  
Transition Economy ◽  
Bank Lending ◽  
Foreign Bank ◽  
Foreign Banks ◽  
Relationship Banking ◽  
Content Type ◽  
Banking Market ◽  
Bank Ownership ◽  
Domestic Banks ◽  
Relationship Of

Purpose China as a main emerging and transition economy has since 2006 opened up its banking market to foreign competition. Thus far, the penetration of foreign banks has been only moderate with around 2 per cent market share of the total banking market, despite the widely held view that foreign banks operate at a higher level of efficiency and that Chinese state-owned banks (SOBs) operate at a lower level of efficiency. The purpose of this paper is to explore the relationship between bank ownership and the lending behaviour and relationship banking that stems from the Chinese tradition of “guanxi”. Design/methodology/approach Based on three bank types the authors construct a model of the choice of bank type and show how that model can be estimated using a multinomial logit. The authors assume that firms choose a bank type as a function of firm characteristics (Berger et al., 2008; Ongena and Sendeniz-Yüncü, 2011), deal terms (Machauer and Weber, 2000; Ziane, 2003), and industry classification (Uchida et al., 2008; Ongena and Sendeniz-Yüncü, 2011). Findings This paper finds the existence of a close banking relationship of a “guanxi” type between SOBs and state-owned enterprises (SOEs). This is shown up in the form of better deal terms for the SOE. In the case of foreign banks the authors find that a foreign bank-foreign owned enterprise relationship exists but this is based on risk quality and no advantages in deal terms, which suggest a more commercial-based relationship. The empirical findings are that transparent and high-quality firms are likely to engage with foreign banks, while state-owned firms are more likely to engage with SOBs. Originality/value In China, few studies have addressed the potentially important role of bank ownership on lending behaviour (e.g. Firth et al., 2008; Berger et al., 2009). The authors extend the analysis by distinguishing not only between foreign and domestic banks, but also between SOBs and other domestic banks. This research seeks to enhance the understanding of bank ownership, lending behaviour and relationship banking.

Foreign banks in MENA countries: how important? How relevant?

2016 ◽  
Vol 32 (1) ◽  
pp. 77-98 ◽  
Author(s):  
Saibal Ghosh
Keyword(s):  
Positive Impact ◽  
Spillover Effects ◽  
Dynamic Panel Data ◽  
Foreign Bank ◽  
Foreign Banks ◽  
Bank Performance ◽  
Content Type ◽  
Mena Countries ◽  
Domestic Banks ◽  
The Impact

Purpose – The role of foreign banks in impacting the behavior of domestic banks has been a relatively unaddressed topic in the literature. Employing bank-wise data on MENA countries during 2000-2012, the purpose of this paper is to examine how the behavior of foreign banks impact domestic bank performance. For this purpose, the authors focus on not only their profitability and stability, but also on broader numbers such as loan portfolio and funding costs. In addition, the authors also explore the impact of foreign banks on the growth of domestic economies and its implications for the allocation of capital and labor. Design/methodology/approach – The authors employ the dynamic panel data methodology as compared to alternate techniques owing to the ability of this technique to effectively address the endogeneity problem of some of the independent variables. Findings – The results suggest that foreign bank presence exerts significant spillover effects. At the same time, increased foreign banks appear to impel domestic banks to cut back lending. As regards its impact on growth, the results indicate that although labor does not exert any discernible impact on GDP growth, capital exerts a positive impact on output when foreign bank penetration is high, supportive of the real effects of foreign banks. Originality/value – To the best of the authors’ knowledge, this is one of the early studies for MENA countries to examine this issue in a systematic manner. Most studies of this genre focus on a limited set of banks/countries, thereby limiting their empirical evidence. By focussing on an extended sample of MENA country banks covering an extended period that subsumes the financial crisis, the analysis is also able to shed light as to how foreign presence impacts domestic bank performance.

scholarly journals Get in with a Foreigner: Consumer Trust in Domestic and Foreign Banks

2017 ◽  
Vol 9 (6) ◽  
pp. 38 ◽  
Author(s):  
Werner Bönte ◽  
Ute Filipiak ◽  
Sandro Lombardo
Keyword(s):  
Institutional Environment ◽  
Retail Banking ◽  
Individual Characteristics ◽  
Foreign Bank ◽  
Foreign Banks ◽  
Highly Educated ◽  
Internet Radio ◽  
Domestic Banks ◽  
Indian Banks ◽  
Customer Trust

Prior research suggests that trust plays an important role in an individual’s decision to participate in financial markets. This paper focuses on potential customers in retail banking markets and empirically investigates their trust in foreign banks and domestic banks. We argue that differences in customer trust can be related to three factors, namely bank-specific characteristics, individual characteristics of the potential customer and characteristics of the institutional environment. Using a large survey on the savings patterns of Indian households, we find that potential retail banking customers in India are less likely to trust foreign banks with their money than private Indian banks. However, our results also suggest that highly educated Indians using information sources such as the Internet, radio or newspaper, tend to have more confidence in foreign banks than in private Indian banks. Moreover, in regions with either more foreign bank branches or higher corruption levels the likelihood of consumers trusting Indian private banks more than foreign banks is lower than in other regions.

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