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Foreign Bank Presence and Bank Spreads: Evidence from Turkey

Author

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  • Julide Yalcinkaya Koyuncu

    (Bilecik University, The Faculty of Economics and Administrative Sciences, Department of Economics, Bilecik, Turkey)

Abstract

Using bank-level data for Turkey, this paper examines whether foreign banks are able to operate with lower spreads and whether the overall level of foreign bank participation in the banking system lowers spreads among domestic banks. Empirical analysis yields that foreign banks are able to charge lower spreads than domestic banks in Turkey. However, findings indicate that the overall level of foreign bank participation in the Turkish banking system does not ffect spreads of domestic banks directly. Instead, the overall level of foreign bank participation in the banking system affects the spreads indirectly through its effects on overhead expenses. Overhead expenses of all banks decrease as foreign bank participation increases.

Suggested Citation

  • Julide Yalcinkaya Koyuncu, 2011. "Foreign Bank Presence and Bank Spreads: Evidence from Turkey," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 5(1), pages 064-075, March.
  • Handle: RePEc:fau:aucocz:au2011_064
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    References listed on IDEAS

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    1. Van Horen, Neeltje, 2007. "Foreign banking in developing countries; origin matters," Emerging Markets Review, Elsevier, vol. 8(2), pages 81-105, May.
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    More about this item

    Keywords

    Foreign banks; Turkey; emerging markets;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East

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