COMPARATIVE ANALYSIS OF FINANCIAL PERFORMANCE OF FOREIGN AND DOMESTIC BANKS IN GEORGIA
International Journal of Finance and Accounting (Scientific and Academic Publisihing), vol.4, no.1, pp.52-59, 2015 (Peer-Reviewed Journal)
- Publication Type: Article / Article
- Volume: 4 Issue: 1
- Publication Date: 2015
- Journal Name: International Journal of Finance and Accounting (Scientific and Academic Publisihing)
- Journal Indexes: Other Indexes
- Page Numbers: pp.52-59
- Open Archive Collection: AVESIS Open Access Collection
- Akdeniz University Affiliated: Yes
Abstract
The liberalization and globalization of the financial system has also affected Georgia which conquered independence after the collapse of Soviet Union in 1991. Today, banking system in Georgia is consistent with modern banking rules and free market conditions. Since foreign participation in the banking sector contributes to the rivalry for innovations and introductions of new bank products in the market, it seems to be worthy in many emerging markets and transition economies like Georgia where commercial banks are a core of the financial system. The aim of this study is to compare the financial performance of foreign and domestic banks in Georgia between 2009-2013 years using profitability ratios along the following dimensions; Return on Assets, Return on Equity, Net Interest Margin and Profit Expense Margin. For this purpose, data of six domestic and nine foreign-partnership commercial banks were used to determine the significance of mean differences of these ratios between foreign and domestic bank groups and among banks covered in this study by means of Independent sample t-test and Analysis of Variance (ANOVA). The study found that there is no significant mean differences of profitability between foreign and domestic banks in terms of ROA, ROE, NIM and PEM, but there are significant mean differences of profitability among banks in terms of ROA, ROE and NIM. On the other hand, there are no significant mean differences among banks in terms of PEM.