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Entry mode choice of multinational banks

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  • Lehner, Maria

Abstract

When expanding abroad, a multinational bank faces a trade-off between accessing a foreign country via cross border lending or financial foreign direct investment, i.e. greenfield or acquisition entry. We analyze the entry mode choice of multinational banks and explicitly derive the entry mode pattern in the banking industry. Moreover, we show that in less developed banking markets, a trend towards cross border lending and acquisition entry exists. Greenfield entry prevails in more developed markets. Furthermore, we identify a tendency towards acquisition entry in smaller host countries and towards greenfield entry in larger host countries.

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  • Lehner, Maria, 2009. "Entry mode choice of multinational banks," Journal of Banking & Finance, Elsevier, vol. 33(10), pages 1781-1792, October.
    • Handle: RePEc:eee:jbfina:v:33:y:2009:i:10:p:1781-1792
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    2. Jeon, Bang Nam & Olivero, María Pía & Wu, Ji, 2011. "Do foreign banks increase competition? Evidence from emerging Asian and Latin American banking markets," Journal of Banking & Finance, Elsevier, vol. 35(4), pages 856-875, April.
    3. LI, Qiang & Zeng, Yong & Zhang, Bo, 2013. "Market characteristics and entry modes of foreign banks," China Economic Review, Elsevier, vol. 24(C), pages 26-41.
    4. Akbel, Basak & Schnitzer, Monika, 2011. "Creditor rights and debt allocation within multinationals," Journal of Banking & Finance, Elsevier, vol. 35(6), pages 1367-1379, June.
    5. Jeon, Bang Nam & Olivero, María Pía & Wu, Ji, 2013. "Multinational banking and the international transmission of financial shocks: Evidence from foreign bank subsidiaries," Journal of Banking & Finance, Elsevier, vol. 37(3), pages 952-972.
    6. Jessy Troudart & Eric Lamarque, 2017. "The cross-border strategies of European banks: Effects on performance 2004-12," Post-Print hal-02536210, HAL.
    7. Havrylchyk, Olena & Jurzyk, Emilia, 2011. "Inherited or earned? Performance of foreign banks in Central and Eastern Europe," Journal of Banking & Finance, Elsevier, vol. 35(5), pages 1291-1302, May.
    8. Merz, Julia & Overesch, Michael & Wamser, Georg, 2017. "The location of financial sector FDI: Tax and regulation policy," Journal of Banking & Finance, Elsevier, vol. 78(C), pages 14-26.
    9. De Haas, Ralph & Ferreira, Daniel & Taci, Anita, 2010. "What determines the composition of banks' loan portfolios? Evidence from transition countries," Journal of Banking & Finance, Elsevier, vol. 34(2), pages 388-398, February.
    10. Niepmann, Friederike, 2023. "Banking across borders with heterogeneous banks," Journal of International Economics, Elsevier, vol. 142(C).
    11. Philipp Harms & Pierre-Guillaume Méon, 2013. "The Composition of FDI in the MENA Region and Other Countries: Econometric Investigation and Implications for MENA Countries," Working Papers 793, Economic Research Forum, revised Nov 2013.
    12. Xiaohui Yuan & Jiayan Yan, 2022. "Reverse Efficiency Spillovers from Host Country Banks to Foreign Banks: Evidence from Emerging Market Bank Subsidiaries in Developed Markets," Management International Review, Springer, vol. 62(6), pages 915-946, December.
    13. Niepmann, Friederike, 2015. "Banking across borders," Journal of International Economics, Elsevier, vol. 96(2), pages 244-265.
    14. Tsai, Hsiangping & Chang, Yuanchen & Hsiao, Pei-Hsin, 2011. "What drives foreign expansion of the top 100 multinational banks? The role of the credit reporting system," Journal of Banking & Finance, Elsevier, vol. 35(3), pages 588-605, March.
    15. Wu, Ji & Jeon, Bang Nam & Luca, Alina C., 2010. "Does Distance Affect the Performance of Foreign Banks? Evidence from Multinational Banking in Developing Countries," MPRA Paper 37083, University Library of Munich, Germany, revised 01 Feb 2012.
    16. Temesvary, Judit, 2014. "The determinants of U.S. banks’ international activities," Journal of Banking & Finance, Elsevier, vol. 44(C), pages 233-247.
    17. Julia Merz & Michael Overesch & Georg Wamser, 2015. "Tax vs. Regulation Policy and the Location of Financial Sector FDI," CESifo Working Paper Series 5500, CESifo.
    18. Friederike Niepmann, 2013. "Banking across borders with heterogeneous banks," Staff Reports 609, Federal Reserve Bank of New York.
    19. Victor Gorshkov, 2011. "Foreign banks' entry into the Russian market: motivation, entry modes and strategies," KIER Working Papers 801, Kyoto University, Institute of Economic Research.
    20. Hryckiewicz, Aneta & Kowalewski, Oskar, 2010. "Economic determinates, financial crisis and entry modes of foreign banks into emerging markets," Emerging Markets Review, Elsevier, vol. 11(3), pages 205-228, September.
    21. Bang Nam Jeon & Maria Pia Olivero & Ji Wu, 2013. "Multinational Banking and Financial Contagion: Evidence from Foreign Bank Subsidiaries," Working Papers 052013, Hong Kong Institute for Monetary Research.
    22. Molyneux, Philip & Nguyen, Linh H. & Xie, Ru, 2013. "Foreign bank entry in South East Asia," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 26-35.
    23. Tri Mulyaningsih & Anne Daly & Riyana Miranti, 2015. "Managing the endogeneity problem of the market structure: a study on banking competition," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 7(2), pages 135-154, April.
    24. Temesvary, Judit, 2015. "Foreign activities of U.S. banks since 1997: The roles of regulations and market conditions in crises and normal times," Journal of International Money and Finance, Elsevier, vol. 56(C), pages 202-222.
    25. Mulyaningsih, Tri & Daly, Anne & Miranti, Riyana, 2015. "Foreign participation and banking competition: Evidence from the Indonesian banking industry," Journal of Financial Stability, Elsevier, vol. 19(C), pages 70-82.

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