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Foreign bank penetration of newly opened markets in the Nordic countries

  • Engwall, Lars
  • Marquardt, Rolf
  • Pedersen, Torben
  • Tschoegl, Adrian E.

The opening to foreign banks in Denmark, Finland, Norway and Sweden provides us with an opportunity to study entry, survival and success in a situation where the entrants were subject to the liability of foreignness but not the liability of newness. We find that despite low survival rates, on balance the entrants gained market share (in terms of the assets of the banking system) over time. Our results for the role of time, links to the home market and problems facing domestic competitors were strongly in accordance with expectations in the cases of Denmark, mixed or indeterminate for Finland and Norway, and strongly opposite in the case of Sweden. Lastly, our results are broadly consistent with the Stiglitz-Weiss argument that new entrants, in this case foreign banks, buy entry by accepting worse lending risks.

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Article provided by Elsevier in its journal Journal of International Financial Markets, Institutions and Money.

Volume (Year): 11 (2001)
Issue (Month): 1 (March)
Pages: 53-63

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Handle: RePEc:eee:intfin:v:11:y:2001:i:1:p:53-63
Contact details of provider: Web page: http://www.elsevier.com/locate/intfin

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  1. Adrian E Tschoegl, 1987. "International Retail Banking as a Strategy: An Assessment," Journal of International Business Studies, Palgrave Macmillan, vol. 18(2), pages 67-88, June.
  2. DeYoung, Robert & Nolle, Daniel E, 1996. "Foreign-Owned Banks in the United States: Earning Market Share or Buying It?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 622-36, November.
  3. Kindleberger, Charles P., 1983. "International banks as leaders or followers of international business : An historical perspective," Journal of Banking & Finance, Elsevier, vol. 7(4), pages 583-595, December.
  4. 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.
  5. Caprio, Gerard Jr. & Klingebiel, Daniela, 1996. "Bank insolvencies : cross-country experience," Policy Research Working Paper Series 1620, The World Bank.
  6. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
  7. Sang-Rim Choi & Adrian Tschoegl & Chwo-Ming Yu, 1986. "Banks and the world’s major financial centers, 1970–1980," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 122(1), pages 48-64, March.
  8. Jacobsen, Siv Fagerland & Tschoegl, Adrian E, 1999. "The Norwegian Banks in the Nordic Consortia: A Case of International Strategic Alliances in Banking," Industrial and Corporate Change, Oxford University Press, vol. 8(1), pages 137-65, March.
  9. S.A. Lippman & R.P. Rumelt, 1982. "Uncertain Imitability: An Analysis of Interfirm Differences in Efficiency under Competition," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 418-438, Autumn.
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  11. Baldwin, John R. & Rafiquzzaman, Mohammed, 1995. "Selection versus evolutionary adaptation: Learning and post-entry performance," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 501-522, December.
  12. Engwall, Lars & Johanson, Jan, 1990. "Banks in industrial networks," Scandinavian Journal of Management, Elsevier, vol. 6(3), pages 231-244.
  13. Sang Choi & Daekeun Park & Adrian Tschoegl, 1996. "Banks and the world’s major banking centers, 1990," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 132(4), pages 774-793, December.
  14. Yafeh, Y. & Yosha, O., 1995. "The Strategic Use of Relationship Banking," Papers 38-95, Tel Aviv.
  15. repec:ner:tilbur:urn:nbn:nl:ui:12-80677 is not listed on IDEAS
  16. Heinkel, Robert L. & Levi, Maurice D., 1992. "The structure of international banking," Journal of International Money and Finance, Elsevier, vol. 11(3), pages 251-272, June.
  17. John Sutton, 1997. "Gibrat's Legacy," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 40-59, March.
  18. Ball, Clifford A. & Tschoegl, Adrian E., 1982. "The Decision to Establish a Foreign Bank Branch or Subsidiary: An Application of Binary Classification Procedures," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 17(03), pages 411-424, September.
  19. Sherrill Shaffer, 1994. "Market conduct and aggregate excess capacity in banking: a cross- country comparison," Working Papers 93-28/R, Federal Reserve Bank of Philadelphia.
  20. Tschoegl, Adrian E, 1983. "Size, Growth, and Transnationality among the World's Largest Banks," The Journal of Business, University of Chicago Press, vol. 56(2), pages 187-201, April.
  21. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
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