Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/258508 
Year of Publication: 
2021
Citation: 
[Journal:] Journal of Risk and Financial Management [ISSN:] 1911-8074 [Volume:] 14 [Issue:] 9 [Article No.:] 404 [Publisher:] MDPI [Place:] Basel [Year:] 2021 [Pages:] 1-36
Publisher: 
MDPI, Basel
Abstract: 
Do foreign banks enjoy a competitive edge in the Chinese banking market or are they disadvantaged vis-à-vis domestic banks? This is the question that the present paper seeks to answer. The issue is important since on the one hand, these banks face the challenges the liability of foreignness brings, but at the same time, they have bank-specific advantages. We examine this issue in light of the literature of the liability of foreignness. In our path-breaking study, we found that due to the cost of foreignness, foreign banks' performance was not as good as that of the local banks. Furthermore, despite the same amount of location- and bank-specific advantages, they performed badly as compared to their local counterparts. It was found that the cost of location-based disadvantages outweighed the cost of bank-specific disadvantages for foreign banks, and recent policy changes may help them overcome some of the cost of foreignness.
Subjects: 
firm-specific advantages
liability of foreignness
location-based advantages
transitional banking sector
JEL: 
G21
M16
N45
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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