The impact of foreign ownership on the financial performance of the Philippine banks listed in the Philippine Stock Exchange for the years 2003 to 2012

• Main Authors: Hermoso, Myrhei Faith B., Lapuz, Ma. Conception N., Onrubia, Micheline Ester C., Tychico, Katrin
• Format: text
• Language: English
• Published: Animo Repository 2014
• Subjects: Banks and banking > Philippines; Bank > Profits > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/6309
• Institution: De La Salle University

The study examines how foreign investors influence the financial performance of the thirteen (13) Philippine banks listed in the Philippine Stock Exchange (PSE) from years 2003 to 2012. Financial performance is measured using the dependent variables namely return on assets (ROA), net interest income (LOGNII), net interest margin (NIM) and cost to income ratio (CostInc). At the bank level, foreign investors' influence is proxied by MicroFP, measured by the number of shares owned by non-Filipino investors over shares outstanding. At the country level, foreign investors' influence is proxied by MacroFP, measured by the number of Philippine banks listed in the PSE with foreign investors over the total number of banks listed in the PSE. Moreover, the random effects model (REM) is used in conducting regressions to determine the relationship and significance of foreign investors' influence to the sample banks' financial performance. When foreign investors' influence is proxied by MicroFP, it is found that foreign ownership in the sample banks does not have any significant effect on the banks' profitability nor costs. On the other hand, when foreign investors' influence is proxied by MacroFP, it is found that the Philippine banks with foreign investors listed in the PSE significantly improves net interest income (LOGNII) and cost to income ratio (CostInc). Aside from this, MacroFP is found to be significant with respect to return on assets (ROA) and net interest margin (NIM).