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The impact of foreign bank entry in emerging markets: knowledge spillovers or competitive pressure?

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  • Minyan Zhu

    (Centre for Competition Policy, University of East Anglia)

Abstract

This study examines whether there are managerial knowledge spillovers from foreign to domestic banks in Eastern Europe and Latin America, additional to competition effects. I estimate the ’pure’ managerial efficiency teasing out external (environmental) effects in a 3-stage Data Envelopment Analysis (DEA) framework. I then examine the evolutionary pattern of foreign and domestic banks’ managerial performance together with that of banking competition. The main results suggest that domestic banks’ managerial performance is positively associated with foreign bank presence. Even during the period when competition is relatively low, domestic banks are catching up with foreign banks. These results suggest the strong possibility of knowledge spillovers in addition to competition effects and call for future direct evidence.

Suggested Citation

  • Minyan Zhu, 2012. "The impact of foreign bank entry in emerging markets: knowledge spillovers or competitive pressure?," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2012-04, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    • Handle: RePEc:uea:ueaccp:2012_04
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    More about this item

    Keywords

    Banking DEA; Managerial Efficiency; Competition; Knowledge Spillover;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • P30 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - General
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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