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Foreign Bank Efficiency In Australia: What Makes A Difference?, Jan-Egbert Sturm, Barry Williams
Foreign Bank Efficiency In Australia: What Makes A Difference?, Jan-Egbert Sturm, Barry Williams
Barry Williams
Purpose – The purpose of this paper is to explore the factors that affect differences in measured efficiency of foreign-owned banks operating in Australia. The relevance of both comparative advantage theory and new trade theory to multinational banking in Australia will be tested.
Design/methodology/approach – A three stage research method is employed. First, estimates of foreign bank efficiency are drawn from a larger sample of domestic and foreign banks in Australia. Efficiency is estimated using parametric distance functions, applying several different specifications of inputs and outputs. Second, factor analysis is used to estimate a series of common factors drawn from …
Characteristics Determining The Efficiency Of Foreign Banks In Australia, Jan-Egbert Sturm, Barry Williams
Characteristics Determining The Efficiency Of Foreign Banks In Australia, Jan-Egbert Sturm, Barry Williams
Barry Williams
The factors determining foreign bank efficiency are investigated using a three stage research method. It is found that host market incumbency reduces efficiency of foreign banks in Australia, resulting in over use of inputs. Factors underlying the limited global advantage hypothesis of Berger, et al. (2000) are identified, in that nationality specific factors represented by dummy variables are not significant once other relevant effects are controlled for. Parent profitability is not fomad to result in increased host nation efficiency, while parent credit rating effects are mixed. Some evidence is presented that banks from more financially sophisticated nations are more efficient. …
What Determines Differences In Foreign Bank Efficiency? Australian Evidence, Jan-Egbert Sturm, Barry Williams
What Determines Differences In Foreign Bank Efficiency? Australian Evidence, Jan-Egbert Sturm, Barry Williams
Barry Williams
This study examines the factors that determine difference in efficiency of foreign bank 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 …