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COMPARATIVE ANALYSIS OF FINANCIAL PERFORMANCE OF FOREIGN AND DOMESTIC BANKS IN GEORGIA

2015; Volume: 4; Issue: 1 Linguagem: Inglês

2168-4812

Yeşim Helhel,

Corporate Finance and Governance

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 and 2013 and their performance before and after January 1st 2012. We used profitability ratios along the following dimensions; Return on Assets (ROA), Return on Equity (ROE), Net Interest Margin(NIM) and Profit Expense Margin(PEM). For this purpose, data of nine foreign and six domestic-partnership commercial banks were used. There were no significant differences of profitability between foreign and domestic banks in terms of ROA, ROE, NIM and PEM, but there were significant differences of profitability among the banks studied in terms of ROA, ROE and NIM, but not in terms of PEM. Pre and post January 1st 2012 profitability performances were found to be significantly different in terms of ROA and NIM, but not in terms of ROE and PEM when the all banks were included in the analysis.