Foreign ownership and market power in banking: Evidence from a world sample

Manthos Delis () and Sotiris Kokas

MPRA Paper from University Library of Munich, Germany

Abstract: Using a novel global data set with bank-year estimates of market power, we examine the impact of (i) the ownership status (foreign or domestic) of individual banks and (ii) the country-level trends in foreign bank presence on our market power estimates. We find that the ownership status of individual banks does not explain banks’ market power. In contrast, the country-level trends in foreign bank ownership have a positive and significant effect on banks’ market power that is primarily due to the fact that most foreign bank entry occurs through mergers and acquisitions and not through de novo penetration. We also find that the positive nexus between foreign bank presence and market power is considerably weaker in countries with well-capitalized banks.

Keywords: Bank market power; competition; foreign banks; world sample (search for similar items in EconPapers)
JEL-codes: D4 F23 G21 (search for similar items in EconPapers)
Date: 2014-02-26
New Economics Papers: this item is included in nep-ban, nep-com, nep-ifn and nep-int
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:53957

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