Domestic Competition: Helped or Hindered by Foreign Firm Entry

Domestic competition: If domestic competition is improved by foreign enterprises entering or interfering with foreign companies and new entrants bring something new in order to expand in new markets, it is a technology that domestic companies can emulate and Bring an idea. This especially applies to emerging countries like capitalism such as China. According to Crocker and Yi-Chung (2004), foreign companies who entered China in the 1980s were so competitive with domestic companies that they could not be ignored.

As globalization intensifies, many domestic companies are threatened by the entry of large foreign-owned companies or multinationals. Large companies have a competitive advantage in pricing. Domestic companies can survive as long as the government's law interferes with the entry of foreign companies. However, most governments liberalize domestic industries. In order to compete with foreign companies, domestic enterprises must merge. The merger will ensure their survival and will allow them to compete more effectively. For example, the combination of DBS and POSB, UOB and OUB will expand the scale of each bank to make it more competitive with other international banks such as Citibank and Standard Chartered Bank in the open financial industry of MAS It means. Therefore, globalization is strengthening the trend of mergers and oligopolies.

In many developing countries, domestic banks inefficiency, high borrowing costs due to lending, and limited corporate limited financing channels. Due to intensified competition, the entry of foreign-owned banks may increase the credit provision and increase the efficiency. However, many bank theories have found an asymmetrical relationship, and some companies suggest that access to credit has been reduced due to intensified competition (Petersen and Rajan, 1995). It is more profitable to prevent foreign banks from corruption, and may only lend to companies that have negative influences on domestic banks and enterprises that rely on it. Large amounts of funds to find information on local companies Is required (Gormley 2007). Bank policies are generally liberalized, and many emerging markets have reduced barriers to financial services trading since the early 1990s.