This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Location decisions of foreign banks and competitive advantage

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Claessens, Stijn
Van Horen, Neeltje

Additional information is available for the following registered author(s):

Abstract

While institutional differences have been found to affect country growth patterns, much has remained unexplained, including how economic actors"overcome"institutional weaknesses and how internationalization helps or hinders development. Banking is an institutionally-intensive activity and the location decision of foreign banks provides a good test of how institutional differences are dealt with and how they may affect economic choices. Specifically, the authors examine whether banks seek out those markets where institutional familiarity provides them with a competitive advantage over other foreign competitor banks. Using bilateral data on banking sector foreign direct investment in all developing countries and controlling for other factors, they find that competitive advantage is an important factor in driving foreign banks'location decisions. The findings suggest that high institutional quality is not necessarily a prerequisite to attract foreign direct investment in banking and that there are specific benefits, as well as risks, to international financial integration between developing countries.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2007/01/17/000016406_20070117121100/Rendered/PDF/wps4113.pdf
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4113.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation: 01 Jan 2007
Date of revision:
Handle: RePEc:wbk:wbrwps:4113

Contact details of provider:
Postal: 1818 H Street, N.W., Washington, DC 20433
Email:
Web page: http://www.worldbank.org/
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: (Roula I. Yazigi).

Related research
Keywords: Banks&Banking Reform; Foreign Direct Investment; Country Strategy&Performance; Corporate Law; Economic Theory&Research;

Other versions of this item:

This paper has been announced in the following NEP Reports: References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Christian Daude & Ernesto Stein, 2007. "The Quality Of Institutions And Foreign Direct Investment," Economics and Politics, Blackwell Publishing, vol. 19(3), pages 317-344, November. [Downloadable!] (restricted)
  2. Rajan, Raghuram G, 1998. "The Past and Future of Commercial Banking Viewed through an Incomplete Contract Lens," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 30(3), pages 524-50, August.
    Other versions:
  3. Williams, Barry, 1998. "Factors affecting the performance of foreign-owned banks in Australia: A cross-sectional study," Journal of Banking & Finance, Elsevier, vol. 22(2), pages 197-219, February. [Downloadable!] (restricted)
  4. Dario Focarelli & Alberto F. Pozzolo, 2000. "The determinants of cross-border bank shareholdings: an analysis with bank-level data from OECD countries," Proceedings, Federal Reserve Bank of Chicago, issue May, pages 199-232.
    Other versions:
  5. Grosse, Robert & Goldberg, Lawrence G., 1991. "Foreign bank activity in the United States: An analysis by country of origin," Journal of Banking & Finance, Elsevier, vol. 15(6), pages 1093-1112, December. [Downloadable!] (restricted)
  6. Arturo Galindo & Alejandro Micco & César Manuel Serra, 2003. "Better the Devil that You Know: Evidence on Entry Costs Faced by Foreign Banks," RES Working Papers 4313, Inter-American Development Bank, Research Department. [Downloadable!]
  7. Yamori, Nobuyoshi, 1998. "A note on the location choice of multinational banks: The case of Japanese financial institutions," Journal of Banking & Finance, Elsevier, vol. 22(1), pages 109-120, January. [Downloadable!] (restricted)
  8. Brealey, R. A. & Kaplanis, E. C., 1996. "The determination of foreign banking location," Journal of International Money and Finance, Elsevier, vol. 15(4), pages 577-597, August. [Downloadable!] (restricted)
  9. Petersen, Mitchell A & Rajan, Raghuram G, 1994. " The Benefits of Lending Relationships: Evidence from Small Business Data," Journal of Finance, American Finance Association, vol. 49(1), pages 3-37, March. [Downloadable!] (restricted)
  10. di Giovanni, Julian, 2005. "What drives capital flows? The case of cross-border M&A activity and financial deepening," Journal of International Economics, Elsevier, vol. 65(1), pages 127-149, January. [Downloadable!] (restricted)
    Other versions:
  11. Berger, Allen N. & Miller, Nathan H. & Petersen, Mitchell A. & Rajan, Raghuram G. & Stein, Jeremy C., 2005. "Does function follow organizational form? Evidence from the lending practices of large and small banks," Journal of Financial Economics, Elsevier, vol. 76(2), pages 237-269, May. [Downloadable!] (restricted)
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ricardo Correa, 2008. "Cross-border bank acquisitions: Is there a performance effect?," International Finance Discussion Papers 922, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  2. Cull, Robert & Martinez Peria, Maria Soledad, 2007. "Foreign bank participation and crises in developing countries," Policy Research Working Paper Series 4128, The World Bank. [Downloadable!]
  3. Claudia M. Buch & Gayle L. DeLong, 2008. "Banking Globalization: International Consolidation and Mergers in Banking," IAW Discussion Papers 38, Institut für Angewandte Wirtschaftsforschung (IAW). [Downloadable!]
Statistics
Access and download statistics

Did you know? The yearly budget of IDEAS is exactly $0: it relies entirely on volunteer work.

This page was last updated on 2009-12-16.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.