موانع یک سیستم جهانی بانکداری: "اروپای قدیمی " در مقابل "اروپای جدید"
|کد مقاله||سال انتشار||تعداد صفحات مقاله انگلیسی||ترجمه فارسی|
|18275||2007||19 صفحه PDF||سفارش دهید|
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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of Banking & Finance, Volume 31, Issue 7, July 2007, Pages 1955–1973
“Old Europe” – the developed nations of continental Europe – averages only about 15% foreign bank ownership, whereas “New Europe” – the transition nations of Eastern Europe – averages about 70%. Similar findings hold elsewhere in the world – developed nations tend to have much lower foreign bank ownership shares than developing nations. We examine the causes of the differences within Europe with an eye toward more general conclusions. Our findings suggest that the low foreign bank shares in “Old Europe” – and perhaps developed nations more generally – may primarily result from net comparative disadvantages for foreign banks and relatively high implicit government entry barriers. The high foreign penetration in “New Europe” – and perhaps developing nations more generally – may be due to net comparative advantages for foreign banks and low government entry barriers, particularly in nations that reduced their state bank ownership.
“Old Europe” – the developed nations of continental Europe – tends to have relatively low foreign bank ownership, whereas “New Europe” – the transition nations of Eastern Europe – often has most of its banking services provided by foreign banks. To illustrate, the three largest developed economies in continental Europe – Germany, France, and Italy – each have less than 10% of assets owned by other European-based foreign banks and less than 15% foreign bank penetration overall. In contrast, three of the largest transition economies – Poland, Czech Republic, and Hungary – each have more than 50% of assets owned by banks headquartered in other European-based foreign banks alone. In this paper, we focus primarily on the causes of the differences in foreign bank ownership between “Old Europe” and “New Europe” with an eye toward drawing more general conclusions about the connections between the level of development and foreign bank ownership. The differences in foreign bank ownership between “Old Europe” and “New Europe” may seem surprising. Most of the “Old Europe” nations – including the three nations cited – are long-term members of the European Union (EU), which has explicitly tried to create a single banking market. These countries in most cases share a common currency and close geographic proximity, reducing the costs consolidating across borders. The “New Europe” nations, in contrast, often had state domination of banking fewer than 20 years ago. Most have now significantly reduced state ownership of banks have lowered other explicit and implicit barriers to entry and allowed foreign banks to control most of their banking assets. In some extreme cases – such as Estonia, Czech Republic, and Croatia – state bank market shares are less than about 5% and foreign bank shares are about 90% or more. The experiences of “Old Europe” and “New Europe” are not atypical of developed and developing nations, respectively, elsewhere in the world. Foreign banks control only about 10% of banking assets in most developed nations in North America and East Asia. While there are exceptions, foreign bank penetration in developed nations is generally quite low relative to many developing nations. To illustrate, the average foreign bank share in the developing nations of Latin America is over 40% and foreign shares are well over 50% in some individual developing nations in Asia and Africa. In a few developing nations – e.g., Belize in Latin America, Macau in Asia, Lesotho in Africa – foreign banks have virtually taken over the banking markets, with market shares of about 90% or more. The relatively low foreign penetration in developed nations may seem surprising. Most of these countries have removed many of the explicit government regulatory barriers to foreign bank entry. The nations of “Old Europe” have adhered to the Single Market Programme (SMP) designed to make the EU as close as possible to a single banking market with a single banking license that may be used across the member nations. Technological advances have also encouraged globalization of the banking system. Improvements in information processing, telecommunications, and financial technologies have all facilitated greater reach across borders. The newer technologies allow banks to manage information flows from more locations and to evaluate and manage risks at lower cost without geographic proximity. In addition, globalization of trade and enlarged cross-border activities of nonfinancial companies have increased demand for banks that can provide services across international boundaries. The low foreign shares in developed nations relative to developing nations may also be surprising because the latter more often have high explicit barriers to foreign entry. In addition, developing nations tend to present difficulties for foreign banks headquartered in developed nations in processing “soft” information about local conditions because of significant cultural and market differences and because these banks are more accustomed to using quality “hard” information – such as credit bureau data and certified audited financial statements – which are often lacking in developing nations. Developing nations also often have significant market shares for state-owned banks. These banks may “crowd out” foreign competition with subsidized services and lax enforcement of loan repayment schedules that make them particularly attractive to borrowers. To analyze the causes of the differences in foreign bank ownership, we use a simple framework in which the primary determinants of foreign bank market shares in a nation are (1) the economic comparative advantages and disadvantages of foreign banks in that nation; and (2) the explicit and implicit barriers to foreign bank competition erected by that nation’s government. To the extent that the comparative advantages of foreign ownership outweigh the disadvantages, foreign banks should be more efficient relative to domestic institutions, giving stronger incentives for foreign banks to enter and expand to exploit these net comparative advantages. To the extent that disadvantages dominate, the associated inefficiencies should discourage foreign bank market penetration. However, even if foreign banks are relatively efficient, their market shares may be relatively small if explicit or implicit government barriers are relatively high and thwart the economic rationale for international banking. By way of preview, the analysis suggests that the relatively low foreign bank shares in “Old Europe” – and to some extent developed nations more generally – may primarily be the result of a combination of (1) net comparative disadvantages for foreign banks in these countries; and (2) relatively high implicit barriers raised by the governments of these nations. The research is consistent with the notions that foreign banks are relatively inefficient in “New Europe” and developed nations generally and that these nations have relatively low explicit government barriers to foreign banks. The framework also suggests that the very high foreign penetration in “New Europe” – and to some extent developing nations more generally – may be due to a combination of (1) net comparative advantages for foreign banks in these countries, and (2) relatively low government entry barriers in some of these nations, particularly the low state bank ownership. The research finds that foreign banks tend to be relatively efficient in “New Europe” and developing nations generally and that these nations have in many cases reduced the implicit barrier to foreign bank entry of state ownership because of transition from socialism or in response to crises. Finally, in some cases in both “Old Europe” and “New Europe” and in both developed and developing nations elsewhere, the “New Zealand effect” occurs. That is, foreign banking organizations from nearby large developed nations take large market shares in a small nation that has created no large private-sector banks to compete with the foreign organizations. The remainder of the paper is organized as follows. Section 2 provides recent data on foreign bank penetration in the EU, distinguishing between “Old” and “New” nations. Section 3 discusses the comparative advantages and disadvantages of foreign banks, some of which differ for developed versus developing nations. Section 4 reviews the empirical research on the relative efficiency of foreign and domestic banks in both categories of nations using data from a number of different countries. Section 5 highlights some of the major explicit and implicit government barriers to foreign bank competition in developed and developing nations. Section 5 displays some data on cross-border banking around the world to illustrate the net effects of the economic comparative advantages and disadvantages and the explicit and implicit government barriers. Finally, Section 7 draws some tentative conclusions.
نتیجه گیری انگلیسی
We analyze the important research and policy issue of why foreign bank competition as measured by market share has been surprisingly weak in developed nations – particularly those in “Old Europe” – and much stronger in many of the developing nations – particularly those in “New Europe.” Under our analytical framework, the main determinants of foreign bank penetration are the economic comparative advantages and disadvantages of foreign banks and the explicit and implicit government barriers to foreign bank competition. We analyze the research literature using this framework and illustrate some of the points using data on “Old Europe” and “New Europe” members of the EU, as well as some less detailed information on developed and developing nations around the world. To highlight key elements of the framework, some of the important economic comparative advantages of foreign banks are their generally superior managerial expertise/experience, access to capital, use of hard-information technologies, and ability to diversify risk. These advantages mostly apply when the host nation is developing, and where the private, domestic institutions have not acquired comparable skills. Some of the important economic disadvantages of foreign banks in developed nations include having to compete with domestic banks that have comparable management, capital, ability to use hard information, and diversification and already have established ties with nonfinancial firms. In developing host nations, other disadvantages of foreign banks generally apply with greater force, including distance-related diseconomies, language and cultural differences, dissimilar levels of development, and use of soft-information technologies. The empirical bank efficiency research suggests that the comparative disadvantages of foreign banks dominate in developed nations and the comparative advantages dominate in developing nations. Studies usually find that foreign banks are inefficient relative to domestic banks in developed nations, and are equally or more efficient than domestic banks in developing nations. The net economic disadvantage in developed nations may occur because foreign banks have to compete on a more equal footing with domestic banks that have comparable skills, in contrast to the relatively weak competition in these dimensions from domestic institutions in most developing nations. This disadvantage of having to compete “in the lions’ den” against comparably-skilled domestic competitors in host developed nations may dominate the other economic differences between developed and developing host nations, even though most of the other comparative disadvantages of foreign banks related to distance, language/culture, dissimilar development, and soft information are likely more severe in developing nations. In developing nations, the superiority of the foreign banks over domestic banks in management, capital, hard information, and diversification appear to dominate all the other economic disadvantages. The major explicit government barriers to foreign bank competition are rules/regulations that explicitly limit foreign entry and/or restrict the activities or expansion of foreign banks that have already entered. We also distinguish three types of implicit government barriers: (1) differences and weaknesses in regulations, legal/judicial/information systems, and so forth; (2) actions of government officials to delay/deny foreign entry and encourage private, domestic institutions to combine into “national” or “international champions;” and (3) subsidized state bank ownership that “crowds out” competition from both domestic and foreign private-sector institutions. In terms of differences between developed and developing nations, all of the government barriers except the second implicit barrier are generally more restrictive in developing nations. The second implicit barrier – actions to delay/deny foreign entry in favor of domestic “champions” may be more likely in developed nations because of the greater abilities of private, domestic institutions in these nations to reach the scale of a “champion.” In some developing nations – particularly some of the “New Europe” nations – the removal of state bank domination left a vacuum that could only be filled by foreign banking organizations. Most developed nations have relatively low explicit government barriers to foreign competition – particularly the “Old Europe” nations within the EU. The first implicit government barrier – rules and regulations that do not explicitly target foreign banks, but create more difficulties for them than for domestic banks – is generally lower in developed host nations. The regulatory environments, legal/judicial systems, information systems, and so forth are also more similar in developed nations – especially within the EU – creating fewer difficulties for potential entrants from developed home nations. As well, the more developed legal/judicial and information infrastructures in developed nations should pose fewer problems for the use of hard-information technologies by foreign banks than the weaker structures in developing nations. The third implicit barrier – state ownership and subsidy of banks – is also clearly more of a problem in developing nations than in developed nations. However, state ownership may not significantly impede foreign competition unless the state-owned share is relatively high. To the extent that our framework captures the primary determinants of foreign bank market shares, the relatively low foreign penetration in developed nations reflects greater net economic disadvantages of foreign bank ownership than in developed nations, higher explicit and/or implicit government barriers, or some combination of these factors. Based on our analytical framework and the arguments, research, and data presented here, we can now suggest the likely reasons why foreign bank penetration is so low in developed nations relative to developing nations. A key reason appears to the net economic disadvantage of foreign banks in developed host nations and net economic advantage of these institutions in developing host nations. The empirical research suggests further that these incentives are present in both developed and developing nations, not just on a relative basis between them. That is, the finding that foreign banks are generally inefficient relative to domestic banks in developed nations suggests a net dominance of economic disadvantages in these nations (not just relative to developing nations), reducing incentives to cross-border banking. The findings for developed host nations conversely increase incentives to expand into these nations. The arguments are also reasonably clear for the effects of government barriers to foreign competition, but there is relatively little evidence on their effects. The only barrier identified here that could help explain the relatively low foreign penetration in developed nations is the second implicit barrier or actions that favor of domestic “champions” over foreign banks. However, there is little objective evidence of these actions, perhaps because their effectiveness may depend on their secrecy. The other government barriers are generally higher in developed nations, but in most cases it is difficult to assess the strength of their effects. One important exception may be the “crowding out” of foreign competition when state-owned banks have commanding market shares. The economic and statistically significant negative correlation of −0.38 between foreign and state market shares in 130 nations strongly suggests that this may have occurred and kept foreign bank presence low is some regions and some individual nations.