To read this content please select one of the options below:

An Empirical Analysis of The Determinants of Bank Internationalization: The Case of India and Nigeria

Abstract

There has been an increase in the number of multinational banks (MNBs) in India and Nigeria. While the literature is replete with analysis of multinational banking in developed countries, not much is known about the drivers of multinational banking in developing countries. This chapter uses the linear probability estimation technique and a sample of 57 Indian and Nigerian banks to investigate firm-level determinants of bank internationalization, as well as inter-bank variations in the number of foreign branches/subsidiaries. The empirical results suggest that the decision by banks from India and Nigeria to internationalize is influenced by firm-level characteristics such as after-tax profit, capital adequacy ratio (CAR), total assets (TA or bank size), volume of customer deposits (CD) and the number of domestic branches. A bank’s decision to establish a given number of foreign branches and subsidiaries depends on variables such as CAR, CD and TA. Based on the empirical results, the chapter proposes some hypotheses about bank internationalization in developing countries.

Keywords

Acknowledgements

Acknowledgments

We wish to thank Sunny Idowu Sado of the Central Bank of Nigeria and Hoa Nguyen of Montgomery College, Maryland, USA, for their comments and suggestions. The draft of this chapter was presented at the 2016 annual conference of the Eastern Economic Association in Washington, DC and the spring 2016 seminar series of the Economics Department at Allegheny College, Meadville, Pennsylvania. We appreciate the feedback from the participants at these events, especially Dr. Hoa Nguyen who provided very useful suggestions for the empirical section of the paper. Research for this chapter was undertaken when Steve Onyeiwu was a Visiting Professor at the Jindal Global University, Sonepat, India.

Citation

Onyeiwu, S. and Das, S. (2020), "An Empirical Analysis of The Determinants of Bank Internationalization: The Case of India and Nigeria", Biswas, R. and Michaelides, M. (Ed.) Financial Issues in Emerging Economies: Special Issue Including Selected Papers from II International Conference on Economics and Finance, 2019, Bengaluru, India (Research in Finance, Vol. 36), Emerald Publishing Limited, Leeds, pp. 1-18. https://doi.org/10.1108/S0196-382120200000036001

Publisher

:

Emerald Publishing Limited

Copyright © 2021 Emerald Publishing Limited