The impact of soft information and institutional quality on foreign bank efficiency-Evidence from ASEAN-5 countries

This paper provides evidence regarding the impact of soft information on foreign bank efficiency in the ASEAN-5 market in the years following the Asian crisis. The analysis presented here develops previous literature by disaggregating soft information into five difference types and examining whether institutional quality (proxied for by host-country economic risk stability index) mitigates the impact. Using a three-stage estimation process we find that soft information does indeed affect foreign banks' efficiencies in an identifiable manner, but host-country institutional quality acts so as to significantly lessen the effect.