Banking in transition economies: Does foreign ownership enhance profitability?

I. Naaborg, B.W. Lensink*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

15 Citations (Scopus)


This paper studies the relationship between foreign ownership and bank performance. A cross-section of 216 banks in transition economies in Central and Eastern Europe and Central Asia is used. In the analyses a continuous foreign ownership variable is applied. The results are checked by using a foreign ownership dummy variable. A negative relationship is found between foreign ownership and banks' interest revenues and profitability, although overhead costs are negatively related to foreign bank ownership as well. The results are independent of countries' GDP per capita and concentration in the banking sector. Evidence is presented for the existence of a home field advantage for domestic banks.

Original languageEnglish
Pages (from-to)545-562
Number of pages18
JournalEuropean Journal of Finance
Issue number7
Publication statusPublished - 2008
EventFinance for Growth and Poverty Reduction - Experience and Policy Conference -
Duration: 10-Apr-200212-Apr-2002


  • banking
  • foreign ownership
  • profitability
  • transition countries

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