The Dynamics of Foreign Bank Ownership
The Dynamics of Foreign Bank Ownership

Author: Giovanni Majnoni

Publisher: World Bank Publications

Published: 2003

Total Pages: 36

ISBN-13:

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The early start of the process of bank restructuring and privatization in Hungary provides a longer and richer amount of evidence than that available for any other transition economy. The authors analyze the dynamics of bank restructuring in Hungary with a focus on the role played by foreign ownership. They explore the performance over time of foreign-owned Hungarian banks and study the extent to which efficiency gains are affected by the chosen acquisition strategy-strategic acquisition in contrast with investment in a newly established bank (greenfield investment)-or by the management style adopted after the acquisition. The authors supplement previous results on the effects of foreign bank ownership in three ways. First, they explicitly consider the time span required for the change of ownership to affect bank performance. Second, the authors explore how important the chosen acquisition strategy is for the success of an acquisition. And third, they study how relevant the adopted management style is to this end, as proxied by the degree of reliance on foreign management.

The Dynamics of Foreign Bank Ownership
The Dynamics of Foreign Bank Ownership

Author: Giovanni Majnoni

Publisher:

Published: 2016

Total Pages: 30

ISBN-13:

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The early start of the process of bank restructuring and privatization in Hungary provides a longer and richer amount of evidence than that available for any other transition economy. Majnoni, Shankar, and Varhegyi analyze the dynamics of bank restructuring in Hungary with a focus on the role played by foreign ownership. They explore the performance over time of foreign-owned Hungarian banks and study the extent to which efficiency gains are affected by the chosen acquisition strategy-strategic acquisition in contrast with investment in a newly established bank (greenfield investment) - or by the management style adopted after the acquisition. The authors supplement previous results on the effects of foreign bank ownership in three ways. First, they explicitly consider the time span required for the change of ownership to affect bank performance. Second, the authors explore how important the chosen acquisition strategy is for the success of an acquisition. And third, they study how relevant the adopted management style is to this end, as proxied by the degree of reliance on foreign management.This paper - a product of the Financial Sector Network - is part of a larger effort to study the effects of financial liberalization.

Foreign Banks and Credit Dynamics in CESEE
Foreign Banks and Credit Dynamics in CESEE

Author: Maria Arakelyan

Publisher: International Monetary Fund

Published: 2018-01-05

Total Pages: 32

ISBN-13: 1484336895

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We use bank-level data on 16 CESEE economies over 2005-2014 to assess the role of foreign banks in the region’s credit dynamics. We confirm that macroeconomic fundamentals of both host and home countries matter, as do the bank and parent bank characteristics. Moreover, we take a new approach by studying the drivers of differential credit growth between parent banks and their foreign subsidiaries. Host country macroeconomic fundamentals cease to play a significant role, while bank-level characteristics and in particular parent bank-level characteristics remain important. From policymakers’ perspective, the paper provides further empirical evidence on the importance of monitoring the health of foreign parent banks as well as the potential regulatory changes in their home jurisdictions.

Corporate Governance and Bank Performance
Corporate Governance and Bank Performance

Author:

Publisher: World Bank Publications

Published: 2005

Total Pages: 43

ISBN-13:

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Abstract: "The authors jointly analyze the static, selection, and dynamic effects of domestic, foreign, and state ownership on bank performance. They argue that it is important to include indicators of all the relevant governance effects in the same model. "Nonrobustness" checks (which purposely exclude some indicators) support this argument. Using data from Argentina in the 1990s, their strongest and most robust results concern state ownership. State-owned banks have poor long-term performance (static effect), those undergoing privatization had particularly poor performance beforehand (selection effect), and these banks dramatically improved following privatization (dynamic effect. However, much of the measured improvement is likely due to placing nonperforming loans into residual entities, leaving "good" privatized banks."--World Bank web site.

Foreign Banks
Foreign Banks

Author: Mr.Stijn Claessens

Publisher: International Monetary Fund

Published: 2012-01-01

Total Pages: 40

ISBN-13: 1463939027

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This paper introduces a comprehensive database on bank ownership for 137 countries over 1995-2009, and reviews foreign bank behavior and impact. It documents substantial increases in foreign bank presence, with many more home and host countries. Current market shares of foreign banks average 20 percent in OECD countries and 50 percent elsewhere. Foreign banks have higher capital and more liquidity, but lower profitability than domestic banks do. Only in developing countries is foreign bank presence negatively related with domestic credit creation. During the global crisis foreign banks reduced credit more compared to domestic banks, except when they dominated the host banking systems.

Inherited or Earned? Performance of Foreign Banks in Central and Eastern Europe
Inherited or Earned? Performance of Foreign Banks in Central and Eastern Europe

Author: Ms.Emilia Magdalena Jurzyk

Publisher: International Monetary Fund

Published: 2010-01-01

Total Pages: 41

ISBN-13: 1451961715

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Using a combination of propensity score matching and difference-in-difference techniques we investigate the impact of foreign bank ownership on the performance and market power of acquired banks operating in Central and Eastern Europe. This approach allows us to control for selection bias as larger but less profitable banks were more likely to be acquired by foreign investors. We show that during three years after the takeover, banks have become more profitable due to cost minimization and better risk management. They have additionally gained market share, because they passed their lower cost of funds to borrowers in terms of lower lending rates. Previous studies failed to pick up the improvements in performance of takeover banks, because they did not account for the performance of financial institutions before acquisitions.

Foreign-Owned Banks
Foreign-Owned Banks

Author: Małgorzata Iwanicz-Drozdowska

Publisher: Springer

Published: 2018-12-17

Total Pages: 220

ISBN-13: 3030011119

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This book provides an in-depth analysis of the role of foreign-owned banks for credit growth, financial stability and economic growth in the post-communist European countries. Using data covering 20 countries over the period from 1995 to 2015, the authors analyse the evolution of banking sectors in CESEE after the transformation in the historical context. This helps draw a new picture of the role of financial development and EU accession in that region, being also a lesson for other countries or regions in transition. Additionally, as the Global Financial Crisis has left a stigma in banking sectors, the book shows its impact on the post-communist banking sectors. As the foreign banks dominate the banking sectors in CESEE countries (the stake of foreign-owned banks is below 50% of assets in only five out of 20 countries), their strategies materially impact the development of CESEE banking sectors, which warrants our scientific exploration. Arriving at a clear concluding point of view on the role of foreign-owned banks and providing insights for future policy of CESEEs towards foreign presence in their banking sectors, this book should be of interest to academics, students, and policymakers.

Bank Ownership Around the World
Bank Ownership Around the World

Author: Ugo Panizza

Publisher:

Published: 2023

Total Pages: 0

ISBN-13:

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This paper builds a dataset on bank ownership that covers more than 6,500 banks in 181 countries (59 low-income economies, 72 middle-income economies, and 50 high-income economies) over 1995-2020. I show that until 2010, there was a reduction in state-ownership of banks and an increase foreign ownership. However, the Global Financial Crisis interrupted or reversed these trends. At the country level, the relationship between bank ownership and each of GDP growth and financial depth is mixed: regressions with country fixed effects indicate that the presence of foreign-owned banks is positively associated with future economic growth and state-ownership is negatively but not robustly associated with future financial depth. Bank-level regressions show that state-owned banks are less profitable and have a higher share of non-performing loans than their private (domestic or foreign) counterparts. State-owned and foreign-owned banks located in developing economies pay and charge lower interest rates than their domestic private counterparts. There is also evidence that state-owned banks stabilize credit in the presence of domestic shocks while foreign banks amplify external shocks. In terms of domestic shocks, foreign banks are not significantly different from their domestic private counterparts.