Foreign Bank Participation in Developing Countries

Cull, Robert; Pería, María Soledad Martínez

doi:10.1016/b978-0-12-397874-5.00022-1

Cited by 9 publications

(10 citation statements)

References 62 publications

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“…Based on our own calculation, almost 80% of the Latin American firms in the FactSet database have at least one of the firm's 15 largest institutional investors from a foreign country, and nearly all of the syndicate loans of Latin American firms in the DealScan database are made with at least one foreign lead bank . This echoes previous finding that Latin America is one of the regions with the highest foreign bank participation (as measured by the percentage of assets held by foreign banks) among all developing countries (Cull and Pería ).…”

Section: Introductionsupporting

confidence: 84%

Effects of Foreign Institutional Ownership on Foreign Bank Lending: Some Evidence for Emerging Markets

Jiang¹,

Zhu

2014

Int Rev Finance

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Despite the large literature on developed countries, little is known about the interactions between corporate governance, foreign ownership, and foreign bank lending in developing countries. Using data from five Latin American countries from 2001 to 2008, we provide one of the first pieces of evidence of how foreign ownership affects the loan cost of borrowers in emerging markets. We find that in terms of foreign bank lending, the cost of debt financing is significantly higher for firms whose largest shareholder is a foreign institutional one. The results support the hypothesis that because of potential agency conflicts between shareholders and creditors, having block institutional shareholders tend to increase the borrowers’ debt burden. There is further evidence supporting this agency conflict hypothesis as we find that the effects of large institutional shareholders on borrowing costs become larger (smaller) when the conflicts are aggravated (mitigated).

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Section: Introductionsupporting

confidence: 84%

Effects of Foreign Institutional Ownership on Foreign Bank Lending: Some Evidence for Emerging Markets

Jiang¹,

Zhu

2014

Int Rev Finance

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“…The impact of foreign banks entering developing markets has long been debated by academics and policy makers: on the one hand, they could bring in much-needed capital, technical skills and product innovation, and greater competition to the banking sector of developing economies; on the other hand, there might also be adverse, destabilising effects for the host nations from the transmission of financial shocks (Cull et al, 2010).…”

Section: Impact Of Foreign Banks' Entry On the Host Nationmentioning

confidence: 99%

“…Claessens and Lee (2003) find that the entry of foreign banks lowers net interest margins, profitability, cost ratios, and non-interest income for domestic banks in developing countries. Fewer restrictions on banks' activities can generate greater competitiveness in the host nations (Cull et al, 2010). Most researchers believe that there is a positive link between foreign bank penetration and competition as well as economic growth and the efficiency of resource allocation (Jeon et.…”

Section: Impact Of Foreign Banks' Entry On the Host Nationmentioning

confidence: 99%

“…Globalisation and the reduction of barriers have allowed foreign banks to enter this region, which has led to greater efficiency and competition (Jeon et al, 2011;Cull et al, 2010;Claessens et al, 2003). Banks benefit from the competitive advantage associated with the new markets they enter (Claessens et al, 2003), but they also contribute to transmitting financial shocks (Claessens et al, 2011).…”

Section: Introductionmentioning

confidence: 99%

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The Performance of Banks in the MENA Region During the Global Financial Crisis

Caporale

Lodh²,

Nandy

2016

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Suman LodhMiddlesex University Monomita NandyBrunel University London May 2016 AbstractThis paper examines the impact of the global financial crisis on the banking sector in the Middle East and North Africa (MENA) region, as well as the main determinants of the profitability of both domestic and foreign banks. The empirical findings suggest that during the crisis the former outperformed the latter in that region. As for the determinants of profitability, size does not appear to play a role, whilst the liquidity ratio and net interest revenues seem to have a negative and positive effect respectively; GDP has a positive effect in the case of domestic banks.

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“…Such a bank can be a branch of a foreign bank, a subsidiary, or a joint venture entity. While a large number of studies generally conclude that the presence of foreign investors is beneficial in terms of financial stability or loan losses (e.g., Barth et al, 2004;Claessens, 2006;Cull and Martínez Pería, 2013), their presence also leads to lower intermediation cost (i.e. spreads or margins) and lower profitability (Beck et al, 2008;Claessens et al, 2001).…”

Section: Control Variablesmentioning

confidence: 99%

Does the Presence of Institutional Investors in Family Banks Affect Profitability and Risk? Evidence from an Emerging Market

Setiyono

Tarazi

2014

SSRN Journal

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This study aims to investigate whether the presence of institutional investors in family-controlled banks impacts their performance and risk. Using detailed data on Indonesian banks from 2001 to 2008 and controlling for various factors, our results first show that family-controlled banks are less profitable and more risky than other banks. Specifically, family presence, either under the form of direct ownership, pure single majority, or family directors, is related to higher default risk, income variability, and loan risk. However, the presence of institutional investors as a second stage block holder in family controlled banks tends to mitigate and even reverse such behavior by reducing risk-taking and improving performance. Our results are generally robust with regard to endogeneity issues and alternative specifications.

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Foreign Bank Participation in Developing Countries

Cited by 9 publications

References 62 publications

Effects of Foreign Institutional Ownership on Foreign Bank Lending: Some Evidence for Emerging Markets

Effects of Foreign Institutional Ownership on Foreign Bank Lending: Some Evidence for Emerging Markets

The Performance of Banks in the MENA Region During the Global Financial Crisis

Does the Presence of Institutional Investors in Family Banks Affect Profitability and Risk? Evidence from an Emerging Market

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