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The Impact of Transnational Banks on Developing Countries' Banking Sector: An Analysis of the Turkish Experience. (1980-89)

Author

Listed:
  • Hatice Jenkins

    (Development and Project Planning Center, University of Bradford, UK)

  • Colin Kirkpatrick

    (Development and Project Planning Center, University of Bradford, UK)

Abstract

The past decade has been marked by a significant increase in the involvement of transnational banks (TNBs) in developing countries. This paper examines the impact of foreign bank participation on the performance of domestic banks in Turkey. The findings suggest that foreign banks introduced advanced technology, knowhow and new financial products to the Turkish banking sector. These developments were expected to induce an improvement in the efficiency of domestic banks. However, the empirical results show that the cost efficiency of domestic banks did not change whereas their profitability increased significantly. These findings show that the domestic firms were able to capture the productivity gains in the form of increased profits. In the absence of effective competition, the domestic banks were not pressured into improving their cost-efficiency performance. This implies that if the market remains oligopolistic and segmented the entry of foreign banks is unlikely to have a significant impact on the economic performance of the domestic banks.

Suggested Citation

  • Hatice Jenkins & Colin Kirkpatrick, 1992. "The Impact of Transnational Banks on Developing Countries' Banking Sector: An Analysis of the Turkish Experience. (1980-89)," Development Discussion Papers 1992-09, JDI Executive Programs.
  • Handle: RePEc:qed:dpaper:257
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    File URL: https://cri-world.com/publications/qed_dp_257.pdf
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    References listed on IDEAS

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    1. Mervyn K. Lewis & Kevin T. Davis, 1987. "Domestic and International Banking," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121263, January.
    2. Gilbert, R Alton, 1984. "Bank Market Structure and Competition: A Survey," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 16(4), pages 617-644, November.
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    Cited by:

    1. Hatice Jenkins & Monir Hussain, 2014. "An Analysis of the Macroeconomic Conditions Required for SME Lending: The Case of Turkey," Development Discussion Papers 2014-06, JDI Executive Programs.
    2. Hatice Jenkins, 2002. "Are Commercial Banks Really Absent From Micro And Small Enterprise Finance?," Development Discussion Papers 2002-12, JDI Executive Programs.
    3. Hatice Jenkins, 1996. "Financial Liberalization and Bank Lending Behavior in Turkey," Development Discussion Papers 1996-05, JDI Executive Programs.

    More about this item

    Keywords

    Transnational banks; performance; cost efficiency; oligopolistic structure; developing countries; Turkey;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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