Foreign Banks are More Efficient–a Myth or Fact?

  •  Saadat Wahid    
  •  Kashif ur Rehman    


The study was conducted to explore the myth that foreign controlled banks were supposed to be more profitable and efficient than local controlled ones. Two out of three financial indicators, understudy, pointed out that the overall performance of the foreign commercial banks, operating in Pakistan, was 24.44% better than the local controlled banks.    
At the end of Year 2007, foreign investors were controlling 58.22% of the outstanding shares in the commercial banks, in Pakistan,. Despite the fact that 40% of the foreign controlled commercial banks were running into deficit, the bank and the capital efficiency of the foreign controlled banks running into profit was better than locally controlled commercial banks. CEOs & directors are having substantial control on the financial affairs of the banks and have a direct relationship with the earning per share and bank efficiency but less control on the profit before tax. The executives-shareholders seem to have lesser liaisons with CEOs & directors but have more impact on the earning per share and bank efficiency.

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