Publications:
Are Foreign Banks Out-Competing U.S. Banks in the U.S. Market?

by Daniel E. Nolle

OCC Working Paper 94-5, May 1994.

Abstract
The market share of foreign-owned banks (subsidiaries, branches, and agencies) in the United States grew dramatically during the 1980s and early 1990s, amid fears that foreign banks were out-competing U.S.-owned banks in their home market. However, more recent data show that growth of the market share of foreign-owned banks has slowed substantially. Furthermore, the data show that foreign-owned banks in the U.S. have persistently exhibited lower profit rates than counterpart U.S.-owned banks, subsidiaries of foreign banks have operated less efficiently than U.S.-owned banks, and in the last few years the credit quality of foreign banks plunged below that of U.S.-owned banks.

These findings call into question fears about foreign banks out-competing U.S. banks in the U.S. market and suggest that, despite having captured a substantial share of U.S. banking business, further penetration of the U.S. banking market by foreign-owned banks is far from certain.

Disclaimer
As with all OCC Working Papers, the opinions expressed in this paper are those of the author alone, and do not necessarily reflect the views of the Office of the Comptroller of the Currency or the Department of the Treasury.

Any whole or partial reproduction of material in this paper should include the following citation: Nolle, Daniel E., "Are Foreign Banks Out-Competing U.S. Banks in the U.S. Market?," Office of the Comptroller of the Currency, E&PA Working Paper 94-5, May 1994.

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