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How Does Foreign Entry Affect Domestic Banking Markets?

Authors:Harry P. Huizinga  and Asli Demirguc-Kunt
Non-Bank Author:S. Claessens
Web Address:Finance Research

Paper published in Journal of Banking and Finance 25(5), April 2001

Variable Definitions and Sources

  • Net margin/ta - interest income minus interest expense over total assets.
  • Before tax profits/ta - before tax profits over total assets.
  • Equity/ta - book value of equity (assets minus liabilities) over total assets
  • Non-interest earning assets/ta - cash, non-interest earning deposits at other banks, and other non-interest earning assets over total assets
  • Customer & short term funding/ta - all short term and long term deposits plus other nondeposit short term funding over total assets
  • Overhead/ta - personnel expenses and other non-interest expenses over total assets
  • Foreign bank share - Foreign bank share is the number of foreign banks to total number of banks. A bank is defined to be a foreign bank if it has at least 50 percent foreign ownership. All individual bank level variables are obtained from BankScope data base of IBCA.
  • Gdp/cap - real GDP per capita in thousands of US$.
  • Growth - annual growth rate in real GDP.
  • Inflation - the annual inflation of the GDP deflator.
  • Real interest - the nominal interest rate minus rate of inflation. Where available, nominal rate is the rate on short term government securities. Otherwise, a rate changed by the Central Bank to domestic banks such as the discount rate is used. If that is not available, then the commercial bank deposit interest rate is used.
  • Openness – exports plus imports divided by Gdp.
Access to Dataset
  • Dataset (MS Excel file, 42kb)

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