This study examines the economic effects of the liberalization of foreign bank entry in the Philippines from 1990 to 2006. The findings provide strong evidence on the dominance of competition effects ...from foreign bank presence which lead to the reduction in the profitability and overhead costs of domestic commercial banks. These findings, which reveal that both the actual market penetration and mere presence of foreign banks seem to exert competitive pressure to domestic banks, imply that foreign banks may serve as an effective competitive force, reducing the excess profits earned by domestic banks and compelling domestic banks to update their production technologies and techniques to improve their cost efficiency.
From a policy perspective, the findings on competition effects of foreign banks in the domestic banking system justify the liberalization of foreign bank entry in the Philippines. The main findings demonstrate that the goal of banking liberalization in transforming domestic banks to be more competitive and efficient works considerably well in the case of the Philippines. Aside from the policy of easing the entry of foreign banks, bank-specific conditions can have significant impact on the performance of domestic banks. Therefore, a sustained improvement in the efficiency of domestic commercial banks requires not only liberalizing the entry of foreign banks, but also on continued strengthening of domestic prudential regulation and supervision on the commercial banking system.
► I examine the economic effects of foreign bank entry in the Philippines. ► Competition effects of foreign banks reduce profitability and costs of domestic banks. ► Both actual penetration and presence of foreign banks exert competitive pressure to banks.
In recent decades, Tokyo, London, and New York have been the sites of credit bubbles of historically unprecedented magnitude. Central bankers have enjoyed almost unparalleled power and autonomy. They ...have cooperated to construct and preserve towering structures of debt, reshaping relations of power and ownership around the world. InCentral Banks and Gold, Simon James Bytheway and Mark Metzler explore how this financialized form of globalism first took shape a century ago, when Tokyo first joined London and New York as a major financial center.
As revealed here for the first time, close cooperation between central banks began along an unexpected axis, between London and Tokyo, around the year 1900, with the Bank of England's secret use of large Bank of Japan funds to intervene in the London markets. Central-bank cooperation became multilateral during World War I-the moment when Japan first emerged as a creditor country. In 1919 and 1920, as Japan, Great Britain, and the United States adopted deflation policies, the results of cooperation were realized in the world's first globally coordinated program of monetary policy. It was also in 1920 that Wall Street bankers moved to establish closer ties with Tokyo. Bytheway and Metzler tell the story of how the first age of central-bank power and pride ended in the disaster of the Great Depression, when a rush for gold brought the system crashing down. In all of this, we see also the quiet but surprisingly central place of Japan. We see it again today, in the way that Japan has unwillingly led the world into a new age of post-bubble economics.
Bank Ownership and Efficiency Altunbas, Yener; Evans, Lynne; Molyneux, Philip
Journal of money, credit and banking,
11/2001, Volume:
33, Issue:
4
Journal Article
Peer reviewed
Open access
Agency issues associated with different types of firm ownership are an area of concern in many banking systems where state-owned banks operate alongside mutual and private-sector institutions. This ...paper uses a variety of approaches to model cost and profit inefficiencies as well as technical change for different ownership types in the German banking market. We find little evidence to suggest that privately owned banks are more efficient than their mutual and public-sector counterparts. While all three bank ownership types benefit from widespread economies of scale, inefficiency measures indicate that public and mutual banks have slight cost and profit advantages over their private sector competitors.
The consolidation of banks around the world in recent years is intensifying public policy debates on the influences of concentration and competition on the performance of banks. In light of these ...developments, this paper first reviews the existing literature on the impact of bank concentration and competition. Second, the paper summarizes the main findings of the papers in this special issue of the JMCB within the context of this active literature. Finally, the paper suggests some directions for future research.
Stephen Girard was the last of the great merchant bankers and the first of the great investment bankers. This is a study not only of an influential man and the bank he operated in Philadelphia but ...also of the growing interdependence between the institutions of government and finance in early nineteenth-century America.
The paper analyzes the evolution of competitive conditions in the Italian banking industry using firm-level balance sheet data for the period 1984-1997. Regulatory reform, large-scale consolidation, ...and competitive pressure from other European countries have changed substantially the banking environment, with potentially offsetting effects on the overall degree of competitiveness. We find that competitive conditions, relatively unchanged until 1992, have improved substantially thereafter, as signaled by the decline in estimated markups. Also, we analyze for the first time the long-run impact of the consolidation process on competition and find no evidence that banks involved in mergers and acquisitions gained market power; at the same time, they exhibit lower than average marginal costs. Finally, after controlling for various factors that may have determined the time pattern of banks' estimated markups, we still detect a significant unexplained drop in our competitive conditions indicators after 1992. Overall, our evidence is consistent with the hypothesis that the deregulation process, which culminated with the implementation of the Second Banking Directive in 1993, significantly contributed to improving bank competition and that it may also have been an important determinant of the consolidation process recorded by the Italian credit system during the 1990s.
In 1863 black communities owned less than 1 percent of total U.S. wealth. Today that number has barely budged. Mehrsa Baradaran pursues this wealth gap by focusing on black banks. She challenges the ...myth that black banking is the solution to the racial wealth gap and argues that black communities can never accumulate wealth in a segregated economy.
We study the effects of a bank's engagement in trading. Traditional banking is relationship-based: not scalable, long-term oriented, with high implicit capital, and low risk (thanks to the law of ...large numbers). Trading is transactions-based: scalable, shortterm, capital constrained, and with the ability to generate risk from concentrated positions. When a bank engages in trading, it can use its spare' capital to profitablity expand the scale of trading. However, there are two inefficiencies. A bank may allocate too much capital to trading ex-post, compromising the incentives to build relationships ex-ante. And a bank may use trading for risk-shifting. Financial development augments the scalability of trading, which initially benefits conglomeration, but beyond some point inefficiencies dominate. The deepending of the financial markets in recent decades leads trading in banks to become increasingly risky, so that problems in managing and regulating trading in banks will persist for the foreseeable future. The analysis has implications for capital regulation, subsidiarization, and scope and scale restrictions in banking.
This short book sets out the history, development and day-to-day workings of a key institutional pillar of the European Union. It assesses its work, independence, the policies and instruments at its ...disposal and the evolution of its role during the eurozone crisis of 2010.
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