Does Foreign Bank Penetration Affect the Risk of Domestic Banks? Evidence from Emerging Economies

42 Pages Posted: 28 Sep 2016

See all articles by Bang Nam Jeon

Bang Nam Jeon

Drexel University - Department of Economics & International Business; Drexel University-School of Economics

Ji Wu

Southwestern University of Finance and Economics (SWUFE) - Research Institute of Economics & Management; Pennsylvania State University Harrisburg

Minghua Chen

Southwestern University of Finance and Economics - Research Institute of Economics and Management

Rui Wang

Southwestern University of Finance and Economics (SWUFE) - Research Institute of Economics & Management

Multiple version iconThere are 2 versions of this paper

Date Written: September 26, 2016

Abstract

We investigate whether foreign bank penetration affects the risk-taking of domestic banks in emerging economies. By using bank-level data from 35 markets during the period of 2000-2014, we find significant evidence that the riskiness of domestic banks increases with the presence of foreign banks, and this finding is shown to be consistent in a series of robustness examinations. We also explore various conditions for the heterogeneity of the nexus between foreign bank penetration and domestic banks’ risk-taking, including: (1) what types of domestic banks are affected more by the presence of foreign banks, and (2) what patterns of foreign penetration exert more pronounced impact.

Keywords: Foreign bank penetration, bank risk-taking, emerging economies

JEL Classification: G21; G15; F36; E44

Suggested Citation

Jeon, Bang Nam and Wu, Ji and Chen, Minghua and Wang, Rui, Does Foreign Bank Penetration Affect the Risk of Domestic Banks? Evidence from Emerging Economies (September 26, 2016). Available at SSRN: https://ssrn.com/abstract=2843638 or http://dx.doi.org/10.2139/ssrn.2843638

Bang Nam Jeon

Drexel University - Department of Economics & International Business ( email )

3141 Chestnut St.
Philadelphia, PA 19104
United States

Drexel University-School of Economics ( email )

3141 Chestnut St.
Philadelphia, PA 19104
United States

Ji Wu (Contact Author)

Southwestern University of Finance and Economics (SWUFE) - Research Institute of Economics & Management ( email )

55 Guanghuacun St
Chengdu, Sichuan 610074
China

Pennsylvania State University Harrisburg ( email )

777 West Harrisburg Pike
Middletown, PA 17057
United States

Minghua Chen

Southwestern University of Finance and Economics - Research Institute of Economics and Management ( email )

Gezhi Building 1201
555 Liutai Revenue, Wenjiang District
Chengdu, Sichuan 610074
China

Rui Wang

Southwestern University of Finance and Economics (SWUFE) - Research Institute of Economics & Management ( email )

55 Guanghuacun Street
Chengdu, Sichuan 610074
China

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
103
Abstract Views
809
rank
299,683
PlumX Metrics