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Foreign and domestic bank performances : An ideal decomposition of industry dynamics

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  • Foreign and domestic bank performances
  • Jeon, Yongil; Miller, Stephen M.
  • University of Nevada, Las Vegas


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Title Foreign and domestic bank performances
Similar Titles
Sub Title

An ideal decomposition of industry dynamics

Material Type Reports
Author(English)

Jeon, Yongil; Miller, Stephen M.

Publisher

[Las Vegas]:University of Nevada, Las Vegas

Date 2004-10
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic System
Industry and Technology < Others
Holding University of Nevada, Las Vegas

Abstract

The aggregate performance of the banking industry depends on the underlying microlevel dynamics within that industry – adjustments within banks, reallocations between banks, entries of new banks, and exits of existing banks. This paper develops a generalized ideal dynamic decomposition and applies it to the return on equity of foreign and domestic commercial banks in Korea from 1994 to 2000. The sample corresponds to the Asian financial crisis and the final stages of a long process of deregulation and privatization in the Korean banking industry. The comparison of our findings reveals that the overall performance of Korean banks largely reflects individual bank efficiencies, except immediately after the Asian financial crisis where restructuring played a more important role on average bank performance. Moreover, Korean regional banks started the restructuring process about one year before the Korean nationwide banks. (The rest omitted)