What Determines Differences in Foreign Bank Efficiency? Australian Evidence

By Jan-Egbert Sturm, Barry Williams. Social Science Research Network, 2010

111 citations recorded by the source corpus.

This study examines the factors that determine differences in efficiency of foreign banks in the host market (Australia). The impact of home market, host market and parent bank characteristics are considered within the frameworks offered by comparative advantage and new trade theories. Parametric distance functions are used to estimate the efficiency of foreign banks in Australia, and the robustness of model specification is tested using both general-to-specific modelling and extreme bounds analysis. It is found that following clients reduces the efficiency of profit creation. Incumbent bank's market share acts as a barrier to entry, while parent bank profits do not improve host nation efficiency. The limited global advantage hypothesis was found to be relevant for banks from the United Kingdom, while banks from the United States were generally less efficient.

Subfields: Accounting, Finance, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/754e2ae4dfabc4575bd9c638524b0a73d9924f25

Citations in the corpus

• Efficiency of Turkish banking: Two-stage network system. Variable returns to scale model (2011, unknown): “This hypothesis is based on anecdotal evidence not only form emerging (transition) economies, i.e., Fries and Taci (2005), Staikouras et al. (2008) but also developed economies, i.e., Sturm and Williams (2010).”