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Cross-Border M&As in the Financial Sector. Is Banking Different from Insurance?

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  • Pozzolo, Alberto Franco

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  • Focarelli, Dario

    ()

Abstract

This paper investigates what factors might help explain the internationalization strategy of banks and insurance companies, by comparing the determinants of cross-border M&As in the two sectors in a unified framework. The empirical analysis shows that between 1990 and 2003 the internationalization of banks and insurance companies followed similar patterns. Distance and economic and cultural integration are important determinants for both the banks’ and the insurance companies’ expansion abroad. Comparative advantage also has a prominent role, the more so for banks. The evidence is less supportive of the view that cross-border M&As are more frequent between similar countries, as predicted by the new trade theory. Finally, and most interestingly, we find indirect evidence consistent with the hypothesis that implicit barriers to foreign entry are more important in explaining the behavior of banks than that of insurance companies.

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File URL: http://web.unimol.it/progetti/repec/mol/ecsdps/ESDP07032.pdf
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Bibliographic Info

Paper provided by University of Molise, Dept. EGSeI in its series Economics & Statistics Discussion Papers with number esdp07032.

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Length: 31 pages
Date of creation: 10 Apr 2007
Date of revision:
Handle: RePEc:mol:ecsdps:esdp07032

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Keywords: international banking and insurance; foreign direct investment;

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Cited by:
  1. Coeurdacier, Nicolas & De Santis, Roberto A. & Aviat, Antonin, 2009. "Cross-Border Mergers and acquisitions: Financial and institutional forces," Working Paper Series, European Central Bank 1018, European Central Bank.
  2. de Haan, Leo & Kakes, Jan, 2010. "Are non-risk based capital requirements for insurance companies binding?," Journal of Banking & Finance, Elsevier, Elsevier, vol. 34(7), pages 1618-1627, July.
  3. Tigran Poghosyan & Jakob de Haan, 2008. "Determinants of Cross-Border Bank Acquisitions in Transition Economies: A Latent Class Analysis," CESifo Working Paper Series 2372, CESifo Group Munich.
  4. Gulamhussen, M. A. & Piheiro, Carlos & Pozzolo, Alberto Franco, 2011. "Do multinational banks create or destroy economic value?," Economics & Statistics Discussion Papers, University of Molise, Dept. EGSeI esdp11057, University of Molise, Dept. EGSeI.
  5. repec:spo:wpecon:info:hdl:2441/c8dmi8nm4pdjkuc9g70aj72cl is not listed on IDEAS
  6. Georgios Fotopoulos & Helen Louri, 2011. "On the Geography of International Banking: a case for spatial econometrics?," ERSA conference papers ersa10p1081, European Regional Science Association.
  7. 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, Elsevier, vol. 35(3), pages 588-605, March.
  8. Alberto Franco Pozzolo, 2008. "Bank cross-border mergers and acquisitions (Causes, consequences and recent trends)," Mo.Fi.R. Working Papers, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences 9, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  9. Georgios Fotopoulos & Helen Louri, 2011. "On the geography of international banking: the role of third-country effects," Working Papers, Bank of Greece 125, Bank of Greece.

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