Mode of Entry and the Performance of Foreign Banks: Evidence from Turkish Banking Industry

  • Ahmet AKIN Fatih University
  • Nizamettin BAYYURT Istanbul Technical University
Keywords: Foreign acquisition, Greenfield investment, Profitability, Efficiency, Banks

Abstract

Emerging economies have been attracting considerable amount of foreign direct investments to the banking industry through cross-border acquisitions and new establishments. Whether mode of entry influences the performance of foreign banks is an important question. This study analyzes the impact of entry mode on the foreign bank performance in Turkey for the period before and after the global financial crisis. Profitability and relative efficiencies are used to measure the performance of banks. Then, Tobit and multivariate regressions are performed to detect the performance differentials between the bank groups. Analysis reveals that greenfield banks have superior performance over the takeover banks in terms of only profitability. Mode of entry does not have a statistically significant effect on efficiency. Besides, there are no efficiency or profitability gains for takeover banks after acquisition.

Published
31-05-2016
Section
Articles