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| Author: | Fries, S. (et al.) |
| Title: | Market entry, privatization and bank performance in transition |
| Journal: | Economics of transition
2006 : VOL. 14:4, p. 579-610 |
| Index terms: | banking imperfect competition transition economies cost functions market entry |
| Language: | eng |
| Abstract: | This study examines how market entry and privatization have affected the performance of banks in post-communist transition. The bank reveneue and cost functions are estimated. The data is gathered on BankScope database. The results indicate that in the first sub-period (1995-1998), average margins on loans and deposits earned by banks grouped by their origin. Privatized banks eartned significantly higher margins than newly established banks or state banks. In the third sub-period (2002-2004), privatized banks with domestic owners retained the widest margins. It seems that state banks underperformed in attracting demand and lowering costs. The findings of the study indicate that both privatization and market entry engouraged more demand for banking services. Also, the foreign bank entry tended to lower costs. |
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