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The purpose of this paper is to estimate empirically the short-term effects of foreign banks entry on bank performance in the Central and Eastern European (CEE) Countries. A sample of 319 banks from ten CEE countries (Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovenia, Slovakia) is used in the analysis. Are...
Context in source publication
Context 1
... empirical estimations we use domestic private credit to the GDP (DCGDP) as proxy for the development of the banking sector in a given country. Figure 3 shows that DCGDP suits quite well for characterising the development of the banking market. First, almost in all the countries, private credit to the GDP has raised constantly, connected with the development of the banking market. ...
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Citations
... Quite often parent banks reduce operational costs by closing its branch's foreign funding channels and becoming its only source of financial resources abroad. Such actions make the branch more dependent on the willingness of the parent bank to provide funding in stressful situations and, thus, make it weaker and more vulnerable in times of crises Source: Compiled by the authors based on (Gardenas, 2004;Liuhto, 2006) ...
Intensive international activity of banks caused by fairly recently lifted financial restrictions in many countries has been a subject of great scientific interest ever since. The article describes various short-term consequences of foreign bank penetration in the financial markets of some of the regions of the world. The authors pay specific attention to the reasons and modes of foreign bank entry in emerging market and transition market economies as well as to the differences in the impact of such entry on the stability and efficiency of financial systems and economies of the countries of Asia, Latin America, Central and Eastern Europe and Russia. Research methods: systemic, comparative and logical analysis.
... Additionally, this study contradicts the findings of Claessens et al. (2001), who found that foreign entry improve bank soundness in emerging markets. The most consistent results (Liuhto, Sorg, & Uiboupin, 2006;Ukaegbu & Oino, 2014) from the model is that higher exposures to foreign bank entry lowers the profit efficiencies of domestic banks. However, in the Ghanaian context, the results were not in support with the findings of Nsiah (2013)-who argued that foreign bank entry improved banks' profitability margins. ...
This study empirically examines the effect of foreign banks entry on banking efficiency scores, using the truncated regression data envelopment analysis model for 25s banks in Ghana, over a 6‐year period (2010–2015). We decompose the efficiency scores into three (technical, cost, and allocative efficiency), and the results indicate that banks in Ghana are marginally inefficient in operating closer to their optimal capacity. The findings show that the input‐oriented model slacks are needed to push an inefficient bank closer to where an efficient bank is positioned. From the results, an immediate and a short‐term entry of foreign banks have a consistent negative relationship with both technical‐ and cost‐efficiency scores whereas long‐term entry of foreign banks shows an inconsistent relationship with the three banking efficiency scores. Thus, the drive towards a positive impact of foreign banks entry on the three efficiency scores is dependent on the form of banking efficiency considered and the interaction term between competitive banking environment (competition) and foreign banks' entry. The study suggests that policymakers and managers in emerging markets should improve on their bank efficiencies in both a competitive banking environment and during periods of foreign bank entry. Moreover, managers of banks should make adjustment to their input resources in order to cope with new banking technologies from foreign bank entry—thereby improving banking efficiencies.
Purpose
– This paper examines the effect that foreign bank entry into China had on transaction fees and service fees charged by domestic Chinese banks.
Design/methodology/approach
– This paper is an empirical study using financial data for listed Chinese banks collected from the China Stock Market Financial Statement Database.
Findings
– This paper finds that domestic banks cut transaction fees and service fees shortly before the entry into China of foreign banks, and domestic banks did not cut transaction fees and service fees after foreign banks entered into China.
Research limitations/implications
– This paper does not examine any non-price strategies employed by local Chinese banks in response to the entry of foreign banks.
Originality/value
– This is the first study to examine transaction fees and service fees charged by domestic Chinese banks in response to the entry of foreign banks into China.
