Advanced Search
MyIDEAS: Login

Performance Comparison between Foreign Banks and Domestic Banks for Asian Emerging Markets-Correcting Selection Bias by Matching Methods


Author Info

  • Yuan Chang

    (Department of Business Education, National Changhua University of Education, Taiwan)

  • Chung-Hua Shen

    (Department of Finance, National Taiwan University, Taiwan)

  • Pei-Fang Chang

    (Department of Banking and Finance, Tamkang University, Taiwan)

Registered author(s):


    Based on the banking data of six Asian emerging market countries from 2007 to 2008, this paper analyzes the differences in financial performance between foreign banks and domestic banks. By applying Rubin's (1973, 1977) matching theory and the propensity score matching of Rosenbaum and Rubin (1983, 1985a, b), four matching methods, namely, the Nearest, Caliper, Mahala and Mahala Caliper, are used to match the financial characteristics of the two groups of banks in order to correct for sample selection bias. The empirical results show that, before sample matching, foreign banks outperform domestic banks in terms of their capital adequacy and underperform them on asset quality. They also do not differ from each other in regard to management ability, earning ability and liquidity risks. After sample matching, most of the evidence suggests that foreign banks exhibit few significant differences from domestic banks based on five CAMEL indicators. The principal outcomes are robust to changes in the definition of foreign banks and to using Heckman's (1979) two-stage estimation to correct for sample selection bias.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL:
    Download Restriction: no

    File URL:
    Download Restriction: no

    Bibliographic Info

    Article provided by College of Business, Feng Chia University, Taiwan in its journal Journal of Economics and Management.

    Volume (Year): 8 (2012)
    Issue (Month): 1 (January)
    Pages: 59-100

    as in new window
    Handle: RePEc:jec:journl:v:8:y:2012:i:1:p:59-100

    Contact details of provider:
    Postal: 100 Wenhwa Road, Seatwen, Taichung
    Web page:
    More information through EDIRC

    Related research

    Keywords: foreign bank; matching theory; propensity score matching; selection bias; CAMEL;

    Find related papers by JEL classification:


    No references listed on IDEAS
    You can help add them by filling out this form.



    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


    Access and download statistics


    When requesting a correction, please mention this item's handle: RePEc:jec:journl:v:8:y:2012:i:1:p:59-100. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Yi-Ju Su).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.