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Does foreign ownership foster bank performance?

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  • Robert Lensink
  • Ilko Naaborg

Abstract

We examine the effect of a rise in foreign ownership on banks' interest revenues and profitability using panel data of banks worldwide. We determine the exact yearly foreign ownership for each bank and construct a continuous foreign ownership variable. Estimating with the system generalized methods of moments (GMM) technique we find that a rise in foreign ownership negatively affects bank performance, providing evidence for the home field advantage theory.

Suggested Citation

  • Robert Lensink & Ilko Naaborg, 2007. "Does foreign ownership foster bank performance?," Applied Financial Economics, Taylor & Francis Journals, vol. 17(11), pages 881-885.
    • Handle: RePEc:taf:apfiec:v:17:y:2007:i:11:p:881-885
    DOI: 10.1080/09603100600827653
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    Cited by:

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    2. Yongseung Han & Myeong Hwan Kim & Won-Joong Kim, 2012. "Determinants of profit efficiency: evidence from Korean savings banks," Applied Financial Economics, Taylor & Francis Journals, vol. 22(12), pages 1003-1016, June.
    3. Nadia Saghi-Zedek, 2016. "Product diversification and bank performance: does ownership structure matter?," Post-Print halshs-01342528, HAL.
    4. Anastasia Stepanova & Olga Ivantsova, 2012. "Does Corporate Governance Have an Effect on Performance in the European Banking Sector? Evidence from a Crisis Environment," HSE Working papers WP BRP 10/FE/2012, National Research University Higher School of Economics.
    5. James Laurenceson & Fengming Qin, "undated". "Has minority foreign investment in China�s banks improved their cost efficiency?," EAERG Discussion Paper Series 1305, School of Economics, University of Queensland, Australia.
    6. Süer, Ömür & Levent, Haluk & Şen, Süleyman, 2016. "Foreign entry and the Turkish banking system in 2000s," The North American Journal of Economics and Finance, Elsevier, vol. 37(C), pages 420-435.
    7. Ghulam Mujtaba Kayani & Yasmeen Akhtar & Chen Yiguo & Tahir Yousaf & Syed Jawad Hussain Shahzad, 2021. "The Role of Regulatory Capital and Ownership Structure in Bank Liquidity Creation: Evidence From Emerging Asian Economies," SAGE Open, , vol. 11(2), pages 21582440211, April.
    8. Vuslat Us, 2015. "The Turkish Banking Sector Before and After the Global Crisis:An Ownership Breakdown," CBT Research Notes in Economics 1502, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    9. Festić Mejra & Črepinko Polona & Bratina Borut, 2020. "The Importance of Corporate Governance of Banks Concerning the Ownership in the International Environment," Naše gospodarstvo/Our economy, Sciendo, vol. 66(4), pages 11-27, December.
    10. Wu, Meng-Wen & Shen, Chung-Hua & Lu, Chin-Hwa, 2015. "Do more foreign strategic investors and more directors improve the earnings smoothing? The case of China," International Review of Economics & Finance, Elsevier, vol. 36(C), pages 3-16.
    11. Chung‐Hua Shen & Chin‐Hwa Lu & Meng‐Wen Wu, 2009. "Impact of Foreign Bank Entry on the Performance of Chinese Banks," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 17(3), pages 102-121, May.
    12. My Tran & Malcolm Abbott, 2020. "The Productivity and Efficiency of Vietnamese Securities Firms, 2009 to 2017," Applied Economics and Finance, Redfame publishing, vol. 7(4), pages 101-111, July.
    13. Wanping Yang & Bingyu Zhao & Jinkai Zhao & Zhengda Li, 2019. "An Empirical Study on the Impact of Foreign Strategic Investment on Banking Sustainability in China," Sustainability, MDPI, vol. 11(1), pages 1-15, January.
    14. Saghi-Zedek, Nadia, 2016. "Product diversification and bank performance: Does ownership structure matter?," Journal of Banking & Finance, Elsevier, vol. 71(C), pages 154-167.

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