Slower growth for foreign banks?

Banks and banking, Foreign - United States ; Banks and banking - West ; Investments, Foreign - Japan

How foreign participation and market concentration impact bank spreads : evidence from Latin America

Increasing foreign participation and high concentration levels characterize the recent evolution of banking sectors'market structures in developing countries. The authors analyze the impact of these factors on Latin American bank spreads during the late 1990s. Their results suggest that foreign banks were able to charge lower spreads relative to domestic banks. This was more so for de novo foreign banks than for those that entered through acquisitions. The overall level of foreign bank participation seemed to influence spreads indirectly, primarily through its effect on administrative costs. Bank concentration was positively and directly related to both higher spreads and costs.Payment Systems&Infrastructure,Banks&Banking Reform,Decentralization,Financial Intermediation,Banking Law,Financial Intermediation,Banking Law,Municipal Financial Management,Financial Crisis Management&Restructuring,Banks&Banking Reform

The Economic Determinants and Engagement Models of Foreign Banks in Central Europe

In the last fifteen years foreign banks have expanded their presence significantly in almost all developing economies. The transition countries are among those economies that have experienced one of the highest levels of banking internationalization in the world. The foreign controlled banking asset in these countries ranges from 70 per cent in Poland to almost 100 per cent in Slovakia. With our study using panel data we examine the economic determinants of foreign bank engagement in the four local banking markets in Central Europe during the period 1994-2004. In addition, we study whether the economic determinants affect different entry vehicles of foreign banks into the Central European markets. Our results show that the most important factors determining foreign bank engagements were (i) large potential of the Central European banking markets and low degree of their financial sophistication (ii) the legal origin of the home country, (iii) the size of the economic growth rates differentials between host and home markets, and (iv) finally the distance between the host country and the foreign bank headquarter. We also find that most foreign banks investments occurred in the period of poor creditor rights protection. Moreover, our results present that the economic determinants had an impact on the decision of the organization form of the foreign banks entering the Central European banking markets. Our results are robust to several controls, including the lack of independence of investment decisions.international banking, foreign direct investment, foreign bank, vehicle of foreign bank entry, Central Europe

Foreign bank entry - experience, implications for developing countries, and agenda for further research

In recent years, foreign bank participation has increased tremendously in several developing countries. In Argentina, Chile, the Czech Republic, Hungary and Poland, for example, more than fifty percent of banking assets are now in foreign-controlled banks. In Asia, Africa, The Middle East, and the former Soviet Union, the rate of entry by foreign banks has been slower, but the trend is similar. Although the number of countries welcoming foreign banks is growing, many questions about foreign bank entry are still being debated, including: 1) What draws foreign banks to a country? 2) Which banks expand abroad? 3) What do foreign banks do once they arrive? 4) How does the mode of a bank's entry - for example, as a branch of its parent, or as an independent subsidiary company - affect its behavior? The authors summarize current knowledge on these issues. In addition, since the existing literature focuses heavily on industrial countries, they put forth an agenda for further study of the effects of foreign bank entry in developing countries.Financial Intermediation,Banks&Banking Reform,Payment Systems&Infrastructure,Financial Crisis Management&Restructuring,Banking Law,Banks&Banking Reform,Financial Intermediation,Financial Crisis Management&Restructuring,Banking Law,Municipal Financial Management

Structural Change and the Efficiency of Banking In Turkey: Does Ownership Matter?

In a period of increasing foreign bank entry, the popular question of “what does foreign bank entry bring to the Turkish banking sector?” can partly be answered with respect to the productivity effects. This paper aims to find the productivity change in the banking sector between 1990 and 2007 just before the global crisis. We are especially interested in the period beginning with 2001 after which the Turkish banking system has almost been flooded with foreign banks. Using a sample of 20 commercial banks, we attempt to find the Data Envelopment Analysis (DEA) type Malmquist Total Factor Productivity Change Index over the specified period. We also look at the source of this change decomposing this index into its mutually exclusive and exhaustive components of efficiency change and technological change. Additionally, we further decompose the technical efficiency change into pure technical efficiency change and scale efficiency change. The DEA results guide us in comparing the performances of banks of different ownership status (state, private and foreign banks) and of different sizeTurkish Banking Industry, Foreign Bank Entry, Globalization of Banking, Data Envelopment Analysis, Efficiency

Risk Analysis of the Romanian Banking System – an Aggregated Balance Sheet Approach

The paper presents a risk analysis for the current Romanian banking system. The analysis is conducted from the point of view of prudential rules and also from the point of view of Romanian banking system’s exposure to foreign funds, considering the consequences of these features, concerning the soundness and reliability of the banking system. The analysis found a manageable risk level, apparently, although during 2009 and 2010 the expansion of risk indicators was accelerated, but finally, in the late 2010, there are some signs of stabilization. The exposure of Romanian banking system to foreign funds was another important risk source. The exposure to foreign funds had an important decrease during 2009, but in 2010 it seems to stabilize.prudential rules, exposure, Basel accords, capital adequacy, Romanian banking system

Has Foreign Entry Made Domestic Banks More Efficient?

Has foreign entry indeed made domestic banks more efficient? Unite's and Sullivan's study, based on a sample of 16 expanded commercial banks (ECBs) and general macroeconomic data for the Philippines for the period 1990-1998, on the whole, supports the view of a general weakening of relationship-style banking brought about by the liberalization of foreign presence in the Philippine banking sector. This has consequences, of course, to the practices in the domestic banking industry. Read more in this Policy Notes.financial liberalization, foreign bank entry, domestic banks, expanded commercial banks

Difficult times for Japanese agencies and branches

Banks and banking, Foreign - United States ; Banks and banking - Japan ; California ; Japan ; Banks and banking - California ; Federal Reserve District, 12th

International activities of U.S. banks and in U.S. banking markets

The international activity of U.S. banks has grown relatively rapidly during the 1990s, as both the trading and derivatives activities of their foreign offices and their cross-border lending have increased. The growth has taken place mainly in relation to the Group of Ten and other industrial countries. Foreign bank activity in U.S. markets has also grown, but at a slightly slower pace than U.S. banking overall, resulting in a small decline in the foreign bank share of domestic commercial bank assets. The role of Japanese banks has declined sharply, and the role of European banks has expanded.Banks and banking, International ; Banking market

Foreign entry in Turkey's banking sector, 1980-97

Despite high and volatile inflation, a record number of foreign and local banks entered Turkey's banking sector after the country relaxed rules about bank entry, and generally eliminated controls on interest rates, and financial intermediation in 1980. The country's financial integration with the rest of the world took a big step forward with the opening up of the capital account in 1989. Capital inflows rose significantly, and the financial system became increasingly linked with external markets. The author examines one dimension of liberalization: the impact of foreign banks entering the financial sector. Between 1980 and the end of 1997, 17 foreign banks, and a number of new local banks entered the sector. The author investigates how these banks'entry into the sector affected performance, based on three measures: net interest margin, overhead expenses, and return on assets (all expressed as a percentage of total assets). He finds that: 1) Foreign bank ownership is related to all three performance measures. 2) Foreign bank entry reduced the overhead expenses of domestic commercial banks, strengthening profits. 3) Despite their small scale operations, foreign banks entering the sector had a strong effect on competition. But the market could use more competition. 4) There are strong indications that foreign banks had a positive impact on financial, and operational planning, credit analysis and marketing, and human capital.Payment Systems&Infrastructure,Financial Intermediation,Financial Crisis Management&Restructuring,Banks&Banking Reform,Banking Law,Banks&Banking Reform,Financial Intermediation,Banking Law,Financial Crisis Management&Restructuring,Municipal Financial Management