(Re)Testing the ‘follow the customer’ hypothesis in multinational bank expansion

Esperança, José Paulo; Gulamhussen, Mohamed Azzim

doi:10.1016/s1042-444x(01)00027-5

Cited by 38 publications

(27 citation statements)

References 22 publications

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“…This variable measures the market potential to acquiring country banks of serving non-corporate customers from their own country that reside in the target country ( Esperanca and Gulamhussen, 2001 ). It is measured by the log of the number of persons born in country i who are living in country j without being permanent residents of that country.…”

Section: Methodsmentioning

confidence: 99%

“…Follow the customer motives may also explain why banks may establish retail facilities in foreign locations where there is a concentration of nationals from their own country ( Esperanca and Gulamhussen, 2001 ). Hence Portuguese banks established in the 1970s retail subsidiaries in Paris to serve the needs of Portuguese maids and butlers who had taken employment there and were eager to send money back to their families in Portugal ( Pellerin, 2009;OECD, 1993 ).…”

Section: Hypothesis 1d Banks Are Likely To Engage In Mandas In Countrimentioning

confidence: 99%

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What drives cross-border M&As in commercial banking?

Gulamhussen

Hennart

Pinheiro

2016

Journal of Banking & Finance

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a b s t r a c tUsing a gravity model, we analyze the determinants of the probability that commercial banks in 89 acquiring countries and 118 target countries will undertake M&As over a 30-year period and of the value of these M&As. We find that the value of cross-border M&As increases with the size of the acquiring country, and that both the probability and value of M&As vary positively with the depth of the financial market in acquirer countries and the presence of corporate and non-corporate customers from acquiring countries in target countries, and negatively with the geographic, psychic, and time zone distances between acquirer and target countries. Our study highlights the role of non-corporate customers and of psychic distance in the cross-border expansion of commercial banks through M&As.

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Section: Methodsmentioning

confidence: 99%

Section: Hypothesis 1d Banks Are Likely To Engage In Mandas In Countrimentioning

confidence: 99%

What drives cross-border M&As in commercial banking?

Gulamhussen

Hennart

Pinheiro

2016

Journal of Banking & Finance

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“…Nigh, Cho, and Krishnan (1986) study the foreign expansion of U.S. banks, finding that U.S businesses' presence in host markets strongly relates to the U.S banks creation of local branches, whereas local business opportunities are irrelevant. Esperança and Ghulamhussen (2001) observe that multinational banks investing in the United States follow both home country firms and diasporas. These banks, therefore, tend to locate new branches close to the subsidiaries and residences of their home country firms and citizens.…”

Section: Market Sizementioning

confidence: 99%

Foreign direct investment patterns of global hotel chains

Santos

Brochado

Esperança

2016

Journal of Business Research

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“…A first set of studies analyzes the determinants of cross-border bank acquisitions. The motivation for cross-border consolidation ranges from the "follow-your-customer" hypothesis (Miller and Parkhe 1998;Esperanca and Gulamhussen 2001) to differences in efficiency between acquirers and target banks (Berger et al 2000). Some studies have explained these deals using arguments from the Foreign Direct Investment (FDI) literature (Goldberg 2004) and New Trade Theory (Berger et al 2004) literature.…”

Section: Motivation and Related Literaturementioning

confidence: 99%