Hello everyone,
I have a panel dataset with 500 banks (in 20 countries) over the period 2000-2015. First, I perform a baseline regression by regressing my dependent variable; bank risk with my independent variable; foreign ownership. Next, I want to know if the impact of foreign ownership on bank risk changes between developed countries and emerging countries, so I run the base line regression separately for developed countries and emerging countries (I am aware that this can be done by including an interaction term as well). When I do this, I get the following coefficients.
For developed countries, I get a coefficient of -0.463***
For emerging countries, I get a coefficient of -0.150***
I have an issue in interpreting the coefficients. When comparing the values of the coefficients, the effect of foreign ownership on bank risk is higher in developed countries (0.463>0.15). However, when I compute the economic significance in terms of standard deviation, I find the following;
A one standard deviation increase in foreign ownership decreases bank risk by 0.03 in developed countries and a one standard deviation increase in foreign ownership decreases bank risk by 0.74 in emerging countries.
I'm confused with this difference. I assumed that the standardized coefficient of developed countries should be higher than emerging countries, since the effect of foreign ownership on bank risk was found to be higher in developed countries, from the baseline regression (0.463>0.15). Can someone please shed some light on this? I apologies if it is a basic question.
Thanks.
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