Abstract
The research expands existing international business literature by exploring the impact of Foreign Direct Investment (FDI) on domestic banks. It investigates how FDI affects the productivity of domestic banks in Sudan. Many countries strive to attract foreign direct investment (FDI) hoping that knowledge brought by FDI will spillover to domestic industries and increase their productivity. In contrast with earlier literature that tried to find positive interindustry spillovers from multinationals, this study focuses on effects operating in banking industry. The analysis, based on firm-level data from Sudan , the results show evidence consistent with positive productivity spillovers from FDI taking place through contacts between foreign affiliates and their local counterparts . The data indicate that productivity spillovers are associated with foreign owned banks.
Highlights
In recent years, given rapid growth and change in global pattern, definition of foreign direct investment (FDI) has been broadened to include the acquisition of a lasting management interest in accompany or enterprise outside the investing firm's home country
Following the research works by Hasan et al (2000, 2003), Haskell et al (2008) who defined two Productivity measure ratios as Total income per full time employee (TIFTE) and Net profit per full time employee (NPFTE), for the purpose of this research and statistic tests, hypotheses of this research were developed as follows; H01-Foreign banks does not perform better than their domestic counterparts in productivity in term of total income per full time employee (TIFTE)
The hypothesis in this study states the following: H01-Foreign banks does not perform better than their domestic counterparts in productivity in term of Total income per full time employee (TIFTE)
Summary
Given rapid growth and change in global pattern, definition of FDI has been broadened to include the acquisition of a lasting management interest in accompany or enterprise outside the investing firm's home country. As such, it may forms, such as direct acquisition of a foreign firm, construction of a facility, or investment of a joint venture or strategic alliances with a local firm with attendant input of technology, licensing of intellectual property, in the past decade FDI has come to play a major role in the globalization of business. In particular the research will focus on the benefits that local commercial banks get from existing of foreign banks operating in Sudan which may introduce an up-to-date banking technology and modified human resources management practices to enhance the productivity of local banks
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