Theses and Dissertations - UTB/UTPA
Date of Award
5-2011
Document Type
Dissertation
Degree Name
Doctor of Philosophy (PhD)
Department
Finance
First Advisor
Dr. Cynthia J. Brown
Second Advisor
Dr. Dave O. Jackson
Third Advisor
Dr. Andre V. Mollick
Abstract
In the last two decades, financial systems in many developing countries became globalized. Mexico presents a clear example of how globalization can change the financial structure of a country. The banking sector in Mexico, as in many other developing countries, experienced periods of expropriation by the Federal government, privatization of banks without foreign intervention, and liberalization of foreign participation in bank ownership during this period. However, only in a few other cases has the rise in foreign participation been more dramatic than in Mexico.
These changes undoubtedly impacted the banking sector’s development and performance. The purpose of this dissertation is to empirically answer the following research questions: Has the efficiency of the Mexican banking sector improved or worsened after the incursion of foreign banks into the banking industry? Are there significant differences in cost and profit efficiency between domestic and foreign banks across time? Are state-level efficiency measures higher in remittance-receiving states? To answer these questions, I propose an analysis of banking efficiency from three different perspectives.
First, a country level analysis that presents the evolution of banking efficiency in Mexico using financial data of all active banks from 2000 to 2009. Second, a bank level analysis that iv examines the relationship between foreign-owned and domestically-owned banks by estimating cost and profit efficiency measures of the top five banks in the industry. Finally, a state level analysis that explores the relationship between financial access and workers’ remittances by categorizing states based on the amount of remittances they receive every year.
Empirical results suggest that profit and cost efficiency improved during the sample period. Profit efficiency varies with time, while cost efficiency remains constant. Furthermore, quarterly analysis of cost and profit efficiency suggests a negative effect from the global financial crisis of 2008 on the profitability of banks. Furthermore, large foreign banks are more cost efficient than large domestic banks, while domestic banks are more profit efficient than foreign banks. Finally, banks that locate in states with higher levels of migration, and therefore receiving higher amounts of remittances, will find a higher demand for financial services than banks in locations receiving lower levels of remittances.
Granting Institution
University of Texas-Pan American
Comments
Copyright 2011 Violeta Díaz Avilez. All Rights Reserved.
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