The Impact of the Economic Liberalization on the Performance of Banks in the Selected Countries

The main objective of this paper is analyzing the effect of the economic liberalization on the banks’ functioning in the selected countries in the middle-income category. We use Fixed Effect estimation method and a dataset for the selected countries during the period of 2002-2014. The results show that the economic liberalization has a positive and significant effect on the bank’s performance in the selected countries. The economic liberalization can create the appropriate regulations and eliminate the restrictions and in this way plays a critical role in providing the prerequisite for the efficient performance of institutions, markets, and banks. The economic liberalization is an important factor in increasing the bank's participation in the economic activities, increasing the quality of their performance by offering effective services via improving the competitive environment and creating a safe market for business.
In addition, the results show that information & Communication Technology, and human capital have a positive and significant effect, and inflation has a negative and significant effect on the bank’s performance in the selected countries.
The application of the information and communication technology into the banking system has brought many advantages, including lower costs, increasing customer numbers, and easier banking operations. Training has always been considered as a reliable tool to improve the performance quality of individual, organization, and help to solve the managing problems. An increase in the inflation also reduces the real rate of return for money. The implicit reduction in the real rate of return amplifies the credit quotation. As a result, the resources would be distributed with less efficiency.