Financial Liberalization and Foreign Bank Entry on the Domestic Banking Performance in MENA Countries
Document Type
Article
Publication Date
9-1-2012
Abstract
This study examines the impact of financial liberalization and foreign bank entry on the domestic banking sector from 1996 to 2007, and builds upon and expands the work of Lee (2002). We find that foreign bank entry, financial liberalization, ownership structure and degree of openness of foreign bank entry positively impact domestic banking system operating efficiency, capitalization, risk management, long-term soundness, financial performance as well as economic and financial development. However, foreign bank entry is associated with reduced profit margins and increased operating costs of domestic banks in countries with less developed capital markets. Empirical evidence seems to support the argument that foreign bank presence leads to better allocation of capital and eliminates connected lending practices. © 2012 The Authors. African Development Review © 2012 African Development Bank.
Publication Title
African Development Review
First Page Number
195
Last Page Number
207
DOI
10.1111/j.1467-8268.2012.00318.x
Recommended Citation
Hassan, M. Kabir; Sanchez, Benito; Ngene, Geoffrey M.; and Ashraf, Ali, "Financial Liberalization and Foreign Bank Entry on the Domestic Banking Performance in MENA Countries" (2012). Kean Publications. 2147.
https://digitalcommons.kean.edu/keanpublications/2147