We investigate the impact of foreign ownership of the financial soundness of the BRICS banking sector. Although the BRICS countries are integrated into the global financial markets and have an increased share of the world GDP, it is still not clear what the real role of foreign ownership is in terms of promoting financial soundness and impacting some macroeconomic factors. We use a pooled regression model to assess the impact of foreign ownership on various measures of financial soundness using a baseline model and two performance models. We found the presence of foreign banks in BRICS increases regulatory capital adequacy, reduces non-performing loans, improves managerial efficiency, increases ROE, reduces liquidity risk, and increases sensitivity to market risk. Practically, this nuanced understanding can guide policymakers in making informed decisions about the level of foreign ownership permissible in domestic banks operating with BRICS to strike a balance between global integration and local financial stability. Theoretically, the finding in this study not only enhances our understanding of the strategies employed by foreign banks but also sheds light on the impact of these strategies on the stability of BRICS countries. Such theoretical insights are crucial for academic discussions and future research directions.

References are not ready for this file yet, please refer to reference from the PDF file

Keywords

foreign ownership, financial soundness, financial stability, financial soundness, emerging markets banking, BRICS countries, domestic banks