Title: Spillover effects in the banking sector of emerging economies: a South Africa case study

Authors: Alex Pietrus; Alireza Nazarian; Z.D. Javad Izadi

Addresses: Bristol Business School, University of the West of England, Bristol, England, UK ' University of Westminster, London, UK ' The Claude Littner Business School, University of the West London, London, England, UK

Abstract: This article aims to identify the presence of knowledge transfer and spillover effects and investigate the mechanism in which they materialise through efficiency and performance gained resulting from two foreign banks' majority and minority ownership in the South African (SA) banking sector. To achieve these objectives, performance and efficiency indicators of ABSA and the Standard Bank are collected and computed using the t-statistics model. The results are analysed in light of interview outputs with several SA banking actors. The findings suggest that not only do these two banks became more efficient after foreign participation in their ownership structure, but also the level of knowledge transfer depends on the type of ownership. In addition, the emergence of Capitec bank, a relatively new player in the SA banking sector, contributed to the competition effect in the segment of retail-banking, whereas the new entity Barclays/ABSA, a majority FDI, became a catalyst to competition effect in the segment of investment banking.

Keywords: knowledge transfer; spillover effects; domestic and foreign banks; financial sector development.

DOI: 10.1504/EJIM.2025.149303

European Journal of International Management, 2025 Vol.27 No.3, pp.510 - 532

Received: 22 Jun 2020
Accepted: 17 Aug 2020
Published online: 24 Oct 2025 *

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