Journal article
Do foreign banks take more risk? Evidence from emerging economies
Journal of banking & finance, v 82, pp 20-39
Sep 2017
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
This paper addresses the impact of foreign ownership on the risk-taking behavior of banks. Using bank-level panel data of more than 1300 commercial banks in 32 emerging economies during 2000–2013, we find that foreign owned banks take on more risk than their domestic counterparts. We further examine several factors that may potentially contribute to foreign banks’ differentiated riskiness from four perspectives, namely, foreign banks’ informational disadvantages, agency problems, the contagious effect of parent banks’ financial conditions and the disparity between home and host markets. We find supportive evidence that these factors play a significant role in affecting foreign banks’ risk-taking.
•This paper examines the impact of foreign ownership on banks’ risk-taking behavior.•We find that foreign owned banks take more risk than their domestic counterparts.•We use bank-level panel data of 1300 commercial banks in 32 emerging economies.•We also identify the factors contributing to foreign banks’ differentiated risks.•We find supportive evidence that these factors affect foreign banks’ risk-taking.
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Details
- Title
- Do foreign banks take more risk? Evidence from emerging economies
- Creators
- Minghua Chen - Southwestern University of Finance and EconomicsJi Wu - Southwestern University of Finance and EconomicsBang Nam Jeon - Drexel UniversityRui Wang - Southwestern University of Finance and EconomicsBang Jeon - Economics (School of Economics)
- Publication Details
- Journal of banking & finance, v 82, pp 20-39
- Publisher
- Elsevier
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:000407659800002
- Scopus ID
- 2-s2.0-85020467402
- Other Identifier
- 991019330807304721
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Business, Finance
- Economics