Internationalisation and firm performance: Evidence from estimates of efficiency in banking in Namibia and Tanzania

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Abstract

This paper assesses and compares the impact of internationalisation on the economic performance of firms in the banking sector in Namibia and Tanzania. With the aid of financial ratios and econometric analysis, measures of efficiency are used as proxies for overall economic performance and comparisons are made. In Namibia, the market is more concentrated than in Tanzania, all the foreign banks are from one country, and they have had a presence in the country for a long time. In Tanzania, the market is less concentrated than in Namibia, foreign entry is from a number of countries and has been more recent. The study finds that in Namibia, all the foreign banks are larger but more inefficient than domestically owned banks. In Tanzania, foreign banks are more efficient than domestic banks. These results suggest that the generation of foreign entry and industry structure are significant determinants of positive spillovers of internationalisation. They also indicate that the type of foreign entrant, not, just foreign entry determines the impact on efficiency and the competitive landscape. Copyright © 2008 John Wiley & Sons, Ltd.

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