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Does the Entry Mode of Foreign Banks Matter for Bank Efficiency? Evidence from the Czech Republic,Hungary, and Poland

dc.contributor.authorThi, Ngoc-Anh Voen_US
dc.contributor.authorVencappa, Deven_US
dc.date.accessioned2009-11-17T17:04:18Z
dc.date.available2009-11-17T17:04:18Z
dc.date.issued2008-06-01en_US
dc.identifier.otherRePEc:wdi:papers:2008-925en_US
dc.identifier.urihttps://hdl.handle.net/2027.42/64431en_US
dc.description.abstractThis paper investigates the impact of specific modes of entry of foreign banks, i.e. greenfield investment versus merger and acquisition, on bank performance in three transition economies ñ the Czech Republic, Hungary, and Poland. We use stochastic frontier analysis to model and measure the cost efficiency of banks. We adopt a maximum likelihood approach to estimation in which the variance of the one-sided error term is modeled jointly with the cost frontier, thus enabling us to retrieve efficiency scores, as well as estimating the various determinants of X-inefficiency. We first find that foreign banks are generally more cost efficient than their domestic counterparts, a result that confirms those of the existing empirical literature. We then turn our focus to comparative performance of greenfield banks versus merger and acquisition banks (M & As), and of M & As versus domestic banks. The results show that on average, M & As are surpassed in terms of efficiency by greenfields banks, but no cost efficiency difference is apparent between M & As and domestic banks. However, we find a strong age effect with respect to M & As which suggests that the evolution of M & Así efficiency follows an inverse U-shape, that means M & As tend to get more inefficient following the acquisition, but approximately 4 years and a haft later, their efficiency starts to improve.en_US
dc.format.extent350018 bytes
dc.format.extent1802 bytes
dc.format.mimetypeapplication/pdf
dc.format.mimetypetext/plain
dc.relation.ispartofserieswp925en_US
dc.subjectBanking, Transition Economies, Foreign Bank Entry, Greenfield, Mergers and Acquisitions, Stochastic Frontier Analysis, Cost Efficiency.en_US
dc.subject.otherG21, F36, C01.en_US
dc.titleDoes the Entry Mode of Foreign Banks Matter for Bank Efficiency? Evidence from the Czech Republic,Hungary, and Polanden_US
dc.typeWorking Paperen_US
dc.subject.hlbsecondlevelEconomicsen_US
dc.subject.hlbtoplevelBusinessen_US
dc.contributor.affiliationumWilliam Davidson Instituteen_US
dc.description.bitstreamurlhttp://deepblue.lib.umich.edu/bitstream/2027.42/64431/1/wp925.pdf
dc.contributor.authoremailnvothi@u-paris10.fren_US
dc.contributor.authoremaildev.vencappa@nottingham.ac.uken_US
dc.owningcollnameWilliam Davidson Institute (WDI) - Working Papers


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