||This study focuses on the status quo of Taiwan’s banking industry by identifying the situation facing banks on the island in recent years and find out how mismanaged banks can be dealt with. Moreover, it discusses the various ways of foreign investors investing in Taiwanese financial institutions and their operating performance.|
There are two principal types of organizations through which foreign investors get access to the Taiwanese financial market, namely privately raised funds and foreign financial institutions. After analyzing the operating performance of foreign financial institutions before acquisition, this study finds that foreign banks generally outperform local banks and that foreign investment can improve problem banks’ operating performance. In respect of corporate governance, before a financial crisis breaks out, a problem bank’s director and supervisor holding ratio and director and supervisor pledge ratio are noticeably different from normal banks. This suggests that these two figures may serve as determining indicators for financial crises.
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