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The Performance of Foreign-Owned Banks in Host Country Economies

Author

Listed:
  • Tereza Fišerová
  • Petr Teplý
  • David Tripe

Abstract

The paper deals with the phenomenon of foreign bank ownership, which is prevalent in the countries of Central, Eastern and South Eastern European region as well as in New Zealand. Using a sample of 17 countries and filtering out more than 140 domestically operating foreign-owned banks, we examine the determinants of their performance in relation to host country conditions over the period of seven years between 2005 and 2011. Based on our knowledge, we use the largest data set in this respect compared to other researchers. Using system GMM and fixed effects models, we reveal that macroeconomic fundamentals of the host country affect the foreign-owned banks' performance but do not suffice in explaining it fully. This result points out that sound banks with higher operational efficiency operating in growing economies with low inflation rate tend to perform better than their peers.

Suggested Citation

  • Tereza Fišerová & Petr Teplý & David Tripe, 2015. "The Performance of Foreign-Owned Banks in Host Country Economies," Prague Economic Papers, Prague University of Economics and Business, vol. 2015(5), pages 538-561.
    • Handle: RePEc:prg:jnlpep:v:2015:y:2015:i:5:id:527:p:538-561
    DOI: 10.18267/j.pep.527
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    generalized method of moments; foreign ownership; fixed effects model; banks and banking; bank performance measurement;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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