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The Effects of Foreign Bank Entry on the Thai Banking Market: Empirical Analysis from 1990 to 2002

Author

Listed:
  • Okuda, Hidenobu
  • Rungsomboon, Suvadee

Abstract

This paper investigates the impact of foreign bank entry on Thai domestic banks by using panel data on 17 domestic commercial banks from 1990 to 2002. The paper examines different factors affecting bank performance, including changes in the foreign ownership of banks, financial regulations, and market structure. We find that an increase in foreign bank presence leads to a rise in overhead expenses, a decline in profits, and an increase in the interest spreads of domestic banks. In the short run, increased competition from foreign banks negatively affects domestic banks. However, in the long run, domestic banks' performance should improve.

Suggested Citation

  • Okuda, Hidenobu & Rungsomboon, Suvadee, 2005. "The Effects of Foreign Bank Entry on the Thai Banking Market: Empirical Analysis from 1990 to 2002," CEI Working Paper Series 2004-20, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hit:hitcei:2004-20
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    File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/13919/1/wp2004-20a.pdf
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    1. repec:wsi:serxxx:v:53:y:2008:i:02:n:s0217590808002914 is not listed on IDEAS

    More about this item

    Keywords

    Bank Performance; Foreign Entry; Crisis; Thailand;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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