Performance of foreign banks in developing countries: Evidence from sub-Saharan African banking markets

Pelletier, Adeline. 2018. Performance of foreign banks in developing countries: Evidence from sub-Saharan African banking markets. Journal of Banking & Finance, 88, pp. 292-311. ISSN 0378-4266 [Article]

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Abstract or Description

Do foreign banks perform better than domestic banks in host developing economies? Relying on financial statements and survey data I compare the performance of three different categories of foreign banks to the group of domestic banks in sub-Saharan Africa: global banks from developed countries, regional African banks and banks from non-African emerging economies. While emerging-market banks and global banks consistently outperform domestic banks, the difference is not significant for regional African banks. The higher performance of global banks and emerging-market banks is related to higher operational efficiency and lower cost of funding, while there is no strong evidence of segmentation by business segment in the loans market. Regional African banks, which started their foreign expansion more recently, are less able to generate interest income compared to domestic banks. These findings highlight the importance of taking into account foreign banks’ heterogeneity when assessing the impact of financial FDI on the host economy.

Item Type:


Identification Number (DOI):


Foreign direct investment, International banking, Performance

Departments, Centres and Research Units:

Institute of Management Studies


1 March 2018Published
5 December 2017Published Online
22 November 2017Accepted

Item ID:


Date Deposited:

05 Mar 2018 12:38

Last Modified:

09 Jun 2021 20:21

Peer Reviewed:

Yes, this version has been peer-reviewed.


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