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The entry and exit decisions of foreign banks in Hong Kong

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Author Info
Man K. Leung (School of Accounting and Finance, Hong Kong Polytechnic University, Hong Kong)
Trevor Young (Economics, School of Social Sciences, University of Manchester, Manchester, UK)
Michael K. Fung (School of Accounting and Finance, Hong Kong Polytechnic University, Hong Kong)
Abstract

This paper presents a theoretical framework for explaining the entry and exit decisions of a firm, motivated by the differential returns in its home and a host market. Within this framework, the factors underpinning the entry and exit decisions of foreign banks in Hong Kong are examined, using a duration (accelerated failure time) model. It can be seen that a foreign bank, with international experience from having more overseas markets will take a shorter (longer) time to enter (exit) the Hong Kong market. Faster (slower) growth both in home trade with Hong Kong and in the Hong Kong banking sector itself will increase the likelihood of entry (exit). Ceteris paribus, Asian banks enter at a faster rate and survive longer in the Hong Kong market. Copyright © 2008 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/mde.1414
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Publisher Info
Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

Volume (Year): 29 (2008)
Issue (Month): 6 ()
Pages: 503-512
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:wly:mgtdec:v:29:y:2008:i:6:p:503-512

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  1. Cerutti, Eugenio & Dell'Ariccia, Giovanni & Martinez Peria, Maria Soledad, 2005. "How banks go abroad : branches or subsidiaries ?," Policy Research Working Paper Series 3753, The World Bank. [Downloadable!]
    Other versions:
  2. Allen N. Berger & Loretta J. Mester, 1997. "Inside the Black Box: What Explains Differences in the Efficiencies of Financial Institutions?," Center for Financial Institutions Working Papers 97-04, Wharton School Center for Financial Institutions, University of Pennsylvania. [Downloadable!]
    Other versions:
  3. Goldberg, Lawrence G. & Saunders, Anthony, 1981. "The determinants of foreign banking activity in the United States," Journal of Banking & Finance, Elsevier, vol. 5(1), pages 17-32, March. [Downloadable!] (restricted)
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  5. Burdett, Kenneth & Kiefer, Nicholas M. & Sharma, Sunil, 1985. "Layoffs and duration dependence in a model of turnover," Journal of Econometrics, Elsevier, vol. 28(1), pages 51-69, April. [Downloadable!] (restricted)
  6. Berger, Allen N, et al, 2004. "Bank Concentration and Competition: An Evolution in the Making," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(3), pages 433-51, June.
  7. Ursacki, Terry & Vertinsky, Ilan, 1992. "Choice of entry timing and scale by foreign banks in Japan and Korea," Journal of Banking & Finance, Elsevier, vol. 16(2), pages 405-421, April. [Downloadable!] (restricted)
  8. M.K. Leung & T. Young, 2005. "Entry of foreign banks in Shanghai: implications for business strategies in an increasingly competitive market," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(6), pages 387-395. [Downloadable!]
  9. Claessens, Stijn & Demirguc-Kunt, Asl[iota] & Huizinga, Harry, 2001. "How does foreign entry affect domestic banking markets?," Journal of Banking & Finance, Elsevier, vol. 25(5), pages 891-911, May. [Downloadable!] (restricted)
  10. Bodenhorn, Howard, 1993. "The Business Cycle and Entry into Early American Banking," The Review of Economics and Statistics, MIT Press, vol. 75(3), pages 531-35, August. [Downloadable!] (restricted)
  11. Joseph P. Hughes & Loretta J. Mester, 1998. "Bank Capitalization And Cost: Evidence Of Scale Economies In Risk Management And Signaling," The Review of Economics and Statistics, MIT Press, vol. 80(2), pages 314-325, May. [Downloadable!] (restricted)
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  12. Fama, Eugene F., 1985. "What's different about banks?," Journal of Monetary Economics, Elsevier, vol. 15(1), pages 29-39, January. [Downloadable!] (restricted)
  13. Brimmer, Andrew F & Dahl, Frederick R, 1975. "Growth of American International Banking: Implications for Public Policy," Journal of Finance, American Finance Association, vol. 30(2), pages 341-63, May. [Downloadable!] (restricted)
  14. Ermisch, John F & Wright, Robert E, 1991. "Employment Dynamics among British Single Mothers," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 53(2), pages 99-122, May.
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  16. DeYoung, Robert, 2003. " De Novo Bank Exit," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(5), pages 711-28, October.
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