Foreign Direct Investment in the Banking Sector: A Transitional Economy Perspective
AbstractIn this paper we use new statistics on Foreign Direct Investments (FDI) in Transitional Economies (TEs) to analyze the issue of foreign ownership in the banking sector, examining the implications for the host banking sector. After considering the potential benefits and risks associated with foreign investment on the banking sector, and on the basis of some empirical results, we reach the conclusion that foreign direct investment is associated with higher profitability; however a substantial foreign ownership is necessary if there is to be a positive effect on cost efficiency. We also analyze the determinants of FDI location choices in TEs providing new empirical evidence, and distinguishing among different levels of foreign partnership.
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Bibliographic InfoPaper provided by Centro Studi Luca d\'Agliano, University of Milano in its series Development Working Papers with number 133.
Date of creation: 01 Nov 1999
Date of revision:
FDI; banking sector; transitional economies.;
Other versions of this item:
- Luca PAPI & Debora REVOLTELLA, 1999. "Foreign Direct Investment in the Banking Sector: a Transitional Economy Perspective," Working Papers 113, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
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