Foreign and Domestic Bank Performances: An Ideal Decomposition of Industry Dynamics

Yongil Jeon and Stephen Miller
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Yongil Jeon: Central Michigan University

No 2002-24, Working papers from University of Connecticut, Department of Economics

Abstract: The aggregate performance of the banking industry depends on the underlying micro-level dynamics within that industry -- adjustments within banks, reallocations between banks, entries of new banks, and exits of existing banks. Jeon and Miller (2002a) extend Bailey, Hulten, and Campbell (1992) and Haltiwanger (1997) to develop a generalized ideal dynamic decomposition. This paper illustrates the ideal dynamic decomposition with return on equity of foreign and domestic Korean commercial banks from 1994 to 2000. The overall performance of Korean banks largely reflects individual bank efficiencies, except immediately after the Asian financial crisis where restructuring played a more important role on average bank performance. Foreign bank performance, however, largely reflected individual bank efficiencies, even immediately after the Asian financial crisis.

Keywords: commercial banks; profitability; foreign banks and global advantage hypothesis (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2002-11
New Economics Papers: this item is included in nep-cfn, nep-eff, nep-ent and nep-ifn
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Related works:
Working Paper: Foreign and Domestic Bank Performances: An Ideal Decomposition of Industry Dynamics (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:uct:uconnp:2002-24

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