Being a Foreigner Among Domestic Banks: Asset or Liability?
IMF Working Papers, December 1, 2009
Source details
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- Being a Foreigner Among Domestic Banks: Asset or Liability?
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Bibliographic details
- Authors: Neeltje van Horen, Stijn Claessens
- Published: December 1, 2009
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451874181.001
Summary
- Studying a large number of banks in various countries between 1999 and 2006, the authors document how foreign banks' performance compares to domestic banks and which factors are associated with better or worse performance.
- Foreign banks' performance improves over time, possibly as they adapt to host-country conditions.
Key findings
- Foreign banks perform better when from a high income country.
- Foreign banks perform better when host country competition is limited.
- Foreign banks perform better when they are large and rely more on deposits for funding.
- Foreign banks' performance improves over time, possibly as they adapt.
- Foreign banks perform better when the home country is geographically or culturally (but not institutionally) close to the host country.
- These findings highlight the importance of controlling for heterogeneity among foreign banks and help reconcile contradictory results in the literature on foreign banks' performance.
Data and research scope
- Timeframe covered: between 1999 and 2006.
- Unit of analysis: a large number of banks in various countries.
Subject areas and keywords
- Subject: Bank credit, Banking, Commercial banks, Competition, Foreign banks
- Keywords: bank activity, bank characteristic, bank performance, domestic bank, foreign bank, WP