Performance of foreign banks in developing countries: evidence from sub-Saharan African banking markets

Adeline Pelletier

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Do foreign banks perform better than domestic banks in host developing economies? Relying on financial statements and survey data I compare the performance of three different categories of foreign banks to the group of domestic banks in sub-Saharan Africa: global banks from developed countries, regional African banks and banks from non-African emerging economies. While emerging-market banks and global banks consistently outperform domestic banks, the difference is not significant for regional African banks. The higher performance of global banks and emerging-market banks is related to higher operational efficiency and lower cost of funding, while there is no strong evidence of segmentation by business segment in the loans market. Regional African banks, which started their foreign expansion more recently, are less able to generate interest income compared to domestic banks. These findings highlight the importance of taking into account foreign banks’ heterogeneity when assessing the impact of financial FDI on the host economy.

Keywords: foreign direct investment; international banking; performance (search for similar items in EconPapers)
JEL-codes: F21 F23 G21 (search for similar items in EconPapers)
Date: 2018-03-01
New Economics Papers: this item is included in nep-ban and nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

Published in Journal of Banking and Finance, 1, March, 2018, 88, pp. 292-311. ISSN: 0378-4266

Downloads: (external link)
http://eprints.lse.ac.uk/86368/ Open access version. (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:86368

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().