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Improving Efficiency of Emerging Market Banks: A Matter of Ownership, Control, or Getting One’s Hands Dirty?

In: Managing in Recovering Markets

Author

Listed:
  • Giang Phung

    (ESCP Europe)

  • Michael Tröge

    (ESCP Europe)

Abstract

Under the Vietnamese strategic partnership program, a range of foreign banks have been allowed to take minority participations in local banks. This paper studies the effect of this program on different measures of bank profitability. We demonstrate that the presence of a foreign partner had a positive impact on performance only if the financial participation was also accompanied by an active implication of foreign bankers. We also observe that whereas foreigners on supervisory board seem to boost accounting return on equity (ROE), a more operational involvement of foreigners on the executive board improves fundamental characteristics such as the net interest margin (NIM).

Suggested Citation

  • Giang Phung & Michael Tröge, 2015. "Improving Efficiency of Emerging Market Banks: A Matter of Ownership, Control, or Getting One’s Hands Dirty?," Springer Proceedings in Business and Economics, in: S. Chatterjee & N.P. Singh & D.P. Goyal & Narain Gupta (ed.), Managing in Recovering Markets, edition 127, chapter 0, pages 327-342, Springer.
    • Handle: RePEc:spr:prbchp:978-81-322-1979-8_26
    DOI: 10.1007/978-81-322-1979-8_26
    as

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