Exporting financial institutions management via foreign direct investment mergers and acquisitions

Berger, Allen N.; Buch, Claudia M.; Delong, Gayle; DeYoung, Robert

doi:10.1016/j.jimonfin.2004.01.002

Cited by 98 publications

(101 citation statements)

References 62 publications

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“…Moreover, a greater distance also reflects differences in culture, language and institutions (see, for example, Berger et al 2003). Results confirm this expectation: distance is negative and significant.…”

Section: Country-level Explanatory Variablessupporting

confidence: 53%

Clustering or Competition? The Foreign Investment Behaviour of German Banks

Lipponer

Buch

2004

SSRN Journal

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Abstract:The presence of other firms in a foreign market can have a double-edged effect on the profitability of new entrants. Firstly, a larger presence of other firms implies more competition and thus lowers the earnings prospects of new entrants. Secondly, there might be positive spill-over effects between the activities of new and old entrants, which can lead to clustering effects. Such clustering of firms in foreign markets has been documented in the empirical literature on foreign direct investment (FDI) of nonfinancial firms, but little evidence is available for banks. This paper analyses whether banks have a tendency to cluster abroad and whether smaller banks in particular invest in markets where other banks are already present. We use firm-level evidence on the foreign direct investments of German banks for the period 1997-2000 to test this hypothesis. Our results suggest that German banks are indeed more active in markets in which other German banks are already present. However, once we control for countryfixed effects, the negative competition effect dominates. Keywords:international banking, clustering, foreign direct investment Nichttechnische Zusammenfassung

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Section: Country-level Explanatory Variablessupporting

confidence: 53%

Clustering or Competition? The Foreign Investment Behaviour of German Banks

Lipponer

Buch

2004

SSRN Journal

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“…This problem becomes even more important when companies are larger and the gap between cultures is wider Haspeslagh and Jemison (1991). Furthermore, Berger et al (2004) concluded that it is difficult for financial institutions to operate in a foreign country because of differences in language, laws and regulations.…”

Section: The Limits Of Foreign Investmentmentioning

confidence: 99%

Does Foreign Ownership Influence Firm Profitability? Evidence from the Tunisian Context

Moez¹,

Marouan²,

Tahar³

2015

IJEF

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The aim of this paper is to examine the impact of foreign ownership on the profitability of Tunisian financial institutions. Empirical evidence shows (i) that the foreign ownership has a positive and significant effect on firm profitability as measured by return on assets and return on equity.(ii) The presence of foreign directors in the board causes also an increase in return on assets. (iii) However, contrary to previous studies, state-owned firms seem to perform better than fully privatized companies.

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“…As recently argued by Berger et al (2003), the so-called new trade theory might be fruitfully applied to the banking industry. One question that has often been posed when analysing the internationalisation of non-financial firms is the extent to which trade and FDI are linked.…”

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FDI Versus Cross-Border Financial Services: The Globalisation of German Banks

Buch

Lipponer

2004

SSRN Journal

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Abstract:The choice between foreign direct investment (FDI) and exports has been a recurrent theme in the literature on international trade, yet few studies have analysed this choice at the level of the individual firm. This paper uses a new dataset to study the FDIversus-exports decision for banks. We use data on the foreign direct investment stocks and the cross-border provision of financial services of German banks for the period 1997-2000 to describe the regional pattern of banks' international activities. We find that country-and bank-specific variables capturing size have a major impact on banks' foreign activities. The results are consistent with the hypothesis that the realisation of economies of scale and the provision of trade-related finance shape globalisation patterns. Greater cultural and geographical distance, by contrast, potentially limit the international expansion of banks. Our results also suggest that FDI and cross-border services are complements rather than substitutes. Keywords:international banking, gravity equations, foreign direct investment, cross-border financial services JEL-Classification: F0, F21 Non Technical SummaryThis paper provides a first comprehensive assessment of the globalisation of the German banking industry based on bank-level data. By combining data from different sources, we draw a fairly complete picture of the foreign direct investments and the cross-border provision of financial services of German banks. The data we use covers the second half of the 1990s, ie a period in which the globalisation of the German banking industry was fully under way. In addition, we disentangle the effects of bank-and country-level explanatory variables, of regulatory and cultural factors, and of factors capturing market size on the internationalisation of German banks. Moreover, having access to data on all German banks, we can separate factors that influence the decision of banks to go abroad from those affecting the actual volume of international business. With regard to the latter, we find that the determinants of entry and of the volume of activity are qualitatively the same.In terms of robustness, we obtain the most stable results for variables that account for size at the bank level and at the country level. More internationally oriented and larger banks also have the largest foreign investments abroad. Larger markets (in terms of GDP) and a large volume of bilateral trade between Germany and a host country promote FDI. Hence, the intention to realise economies of scale is an important motive behind the international expansion of German banks. Moreover, the impact of the variables capturing bank and market size is the same across the different forms of foreign activities that we consider, ie FDI and cross-border financial services. In particular, the impact of trade is positive throughout. The provision of trade-related financial services thus remains a major driving force behind the globalisation of German banks. Besides, more profitable banks are more active internationally, w...

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Exporting financial institutions management via foreign direct investment mergers and acquisitions

Cited by 98 publications

References 62 publications

Clustering or Competition? The Foreign Investment Behaviour of German Banks

Clustering or Competition? The Foreign Investment Behaviour of German Banks

Does Foreign Ownership Influence Firm Profitability? Evidence from the Tunisian Context

FDI Versus Cross-Border Financial Services: The Globalisation of German Banks

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