IDEAS home Printed from https://ideas.repec.org/p/wdi/papers/2009-948.html
   My bibliography  Save this paper

Banking Market Liberalization and Bank Performance: the Role of Entry Modes

Author

Listed:
  • Ngoc-Anh Vo Thi

Abstract

This paper analyzes the evolution in bank performance following the removal of legal restrictions on the entry of foreign banks in three transition economies: the Czech Republic, Hungary, and Poland. Two modes of foreign bank entry are considered: entry by Greenfield investments, and by foreign mergers and acquisitions of domestic banks. For this purpose, we construct a panel data of banks from the three countries over the period 1994-2004. We determine the dates on which liberalization occurred in each country. Bank performance is reflected by accounting measures of profitability, net interest margin, and operating costs. The results show a very limited effect of the entry of Greenfield banks on domestic banking market in the early transition period. In contrast, the foreign entry by mergers and acquisitions of domestic banks exerts significant impacts on bank performance. Indeed, we observe significant declines in banks' profits and net interest margins, and a significant increase in operating costs. Our results have important policy implications for those emerging and transition economies still hesitant to liberalize their banking markets.

Suggested Citation

  • Ngoc-Anh Vo Thi, 2009. "Banking Market Liberalization and Bank Performance: the Role of Entry Modes," William Davidson Institute Working Papers Series wp948, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:2009-948
    as

    Download full text from publisher

    File URL: http://deepblue.lib.umich.edu/bitstream/2027.42/64408/1/wp948.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. M. Kabir Hassan & Benito Sanchez & Geoffrey M. Ngene & Ali Ashraf, 2012. "Financial Liberalization and Foreign Bank Entry on the Domestic Banking Performance in MENA Countries," African Development Review, African Development Bank, vol. 24(3), pages 195-207, September.

    More about this item

    Keywords

    Banking; Transition Economies; Foreign Bank Entry; Greenfield Investment; Mergers and Acquisitions; Bank Performance.;
    All these keywords.

    JEL classification:

    • 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
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wdi:papers:2009-948. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: WDI (email available below). General contact details of provider: https://edirc.repec.org/data/wdumius.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.