Improving Efficiency of Emerging Market Banks: A Matter of Ownership, Control, or Getting One’s Hands Dirty?

Giang Phung () and Michael Tröge ()
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Giang Phung: ESCP Europe
Michael Tröge: ESCP Europe

Chapter Chapter 26 in Managing in Recovering Markets, 2015, pp 327-342 from Springer

Abstract: Abstract Under the Vietnamese strategic partnership program, a range of foreign banks have been allowed to take minority participations in local banks. This paper studies the effect of this program on different measures of bank profitability. We demonstrate that the presence of a foreign partner had a positive impact on performance only if the financial participation was also accompanied by an active implication of foreign bankers. We also observe that whereas foreigners on supervisory board seem to boost accounting return on equity (ROE), a more operational involvement of foreigners on the executive board improves fundamental characteristics such as the net interest margin (NIM).

Keywords: Foreign investment; Strategic partnership; Board participation; Emerging market; Banking performance (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-81-322-1979-8_26

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DOI: 10.1007/978-81-322-1979-8_26

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