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This chapter examines the transition in the US banking industry from a community to a national logic, developing a general model to explain how and when shifts in institutional logics occur. Based on qualitative historical evidence and discrete-time event history analysis predicting the introduction of legislation favoring the national logic, this chapter proposes that dramatic exogenous events such as the Great Depression or more gradual processes such as modernization favored the industry's transition to the national logic, but that such exogenous events had a greater influence in areas where strategic actors could capitalize on them. The qualitative evidence presented here suggests that struggles involving organizational identity and “legitimacy politics” played an important role in the shift in logics. Our theorizing focuses on how, when the environment changes in an incremental fashion, actors are primed with new possibilities, which may shift their collective identities, but when environmental changes are discontinuous, they provide actors strategic opportunities to alter the balance of logics in the environment.

This research aims to empirically analyze the spatial bank branch network in Canada. The authors study the market structure (both industrial and geographic concentrations) via its own or adjacent postal areas. The empirical framework of this study considers branch density (the ratio of the total number of branches to area size) by employing a spatial two-way fixed effects model. The main finding of this study is that there are no effects associated with market structure, however, there are strong spatial within and nearby effects associated with the socioeconomic variables. In addition, the authors also study the effect of spatial competition from rival banks: they find that large banks and small banks tend to avoid markets dominated by their competitors.

This chapter analyzes the relations among bank mergers, changes in boards and their networks, and changes in the global footprint of merging banks. We examine all mergers involving U.S. banks with foreign branches between 1986 and 2004. We find that while the largest banks have become even larger through mergers, their boards have stayed roughly the same size with the same pattern of connections, leaving banks relatively less central in the intercorporate network. And while global banks previously had more globally oriented boards, this is no longer the case, as the link between board networks and strategy has become more tenuous. Because global banks were particularly prone to merging, the average commercial bank in the U.S. is now far more domestically oriented than firms in most other industries. American banks have thus become more domestic at the same time that the rest of American industry has grown much more global.

Purpose: The present study investigates how the performance of Greek bank branching varies when the external environment causes dramatic changes that are reflected in recession and capital control effects.

Design/Methodology: A unique dataset of accounting Profit and Loss statements of retail branches of a systemic Greek commercial bank, closely supervised by the European Central Bank (ECB), is utilized. A profit bootstrap Data Envelopment Analysis (DEA) model is selected to measure the bank branch efficiency. The derived efficiency estimates are analyzed through a second-stage panel data regression analysis against a set of efficiency drivers related to branch profitability, diversification of income, branch size, and branch activity.

Findings: The results indicate that recession negatively affects branch efficiency in the short and long run. The occurrence of recession significantly intensifies the efficiency premium of branch profitability, reduces the efficiency premium of diversification of income (i.e., a negative efficiency effect is recorded during the early recession period), while mitigating the generally negative efficiency effect of branch size. The analysis of efficiency effects from the deep recession period that encompasses capital controls reveals the importance of diversification of income for the improvement of profit efficiency at bank branch level.

Originality/Value: This is the first branch banking study that explores branch efficiency alteration and the dynamic of branch efficiency drivers when the economy suddenly enters recession and afterwards when conditions are becoming extremely difficult and consequently capital controls are imposed on the economy.

This study examines the effects of foreign branch activity on commercial banks in the Central, Eastern, and Southeastern European countries for the period 1995–2015. The author shows that more foreign bank branches are present in countries that have higher taxes and regulatory restrictions on bank activity. The increased activity of foreign bank branches adversely affects lending by foreign banks, and to a lesser extent, that of state-owned banks. The author attributes this finding to the fact that foreign bank branches and foreign banks compete for the same type of clients, namely, multinational corporations.

We distinguish between two forms of local banks that build and maintain legitimacy in different ways: branches and unit banks. Branches gain legitimacy through the parent organization. Unit banks gain legitimacy through the personal reputation and social connections of the founders. Given the different ways in which legitimacy is built by these organizational forms, we think that the rural or urban nature of the community is likely to affect the founding rates of these two forms differently. Rural communities, in which personal and family relationships play an important role in both social and economic life, provide advantages to well-connected founders of unit banks. In these communities social networks serve as a demand buffer for unit banks, making the founding rate of this organizational form less sensitive to fluctuations in the demand for banking services in rural versus urban communities. In contrast, the founding rate of branches may not be greatly affected by the community context because branches gain legitimacy through a sponsoring organization whose legitimating characteristics are not local. Empirical analyses of foundings of local banks between 1976 and 1988 support these predictions. Supplemental empirical analyses also show no evidence of such buffering effect for unit retail establishments, which are expected to be less central in the social networks of rural communities than unit banks. Our results suggest that community organization channels resources to some kinds of organizations at the expense of others and that organizational research in general and organizational ecology in particular will benefit by paying more attention to community context.

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.

Recalling that the introductory chapter (Chapter 1) wanted to carry out similar types of analysis for the major states in India. Thus, the present chapter tries to examine the trends of a bank branch, deposit, credit, the credit–deposit ratio, sectoral shares of credit, magnitudes of banking transactions, credit concentration, etc., for the selected 15 states and Delhi as the only union territory for the period 1972–2019. The study period covers the pre-reform period from 1972 to 1992 and the post-reform period 1993–2019. The observations show that the branch, deposit and credit did not grow significantly during the post-reform period. As a result, the credit–deposit ratio did not increase significantly during the reform period. But, the magnitude of banking transactions increased in most of the states during the reform period. Regarding the sector-wise share of credit, AP, Maharashtra, UP and TN are the leading states in agricultural credit, WB, Gujarat and Maharashtra are in industrial credit and Kerala, Assam and Delhi are in the service sector. On the other hand, the study finds rising magnitudes credit concentrations of the states during the post-reform period in contrast to the declining concentration in the pre-reform period. Maharashtra is the state which holds around 25 per cent of all states’ credit throughout the entire period of 1972–2019. Hence, there are the notions of rising disparity and inequality in credit as well as incomes of the states and all India levels.

On the one hand, there are traditional banks with high street branches; on the other hand, there are neobanks that do not operate physical branches. The ongoing lockdown has placed restrictions on the movement of people. This study aims to extend knowledge on new trends to provide financial services amid the COVID-19 global pandemic. The study also explores social media's impact on banking in the United Kingdom from the total relationship marketing (TRM) theory (Gummesson, 2017). Tweets from 12 banks in the United Kingdom were thematically analysed to understand the challenges and issues banks face due to the pandemic and how they use Twitter to communicate and engage customers since they provide financial services through mobile applications. The location, which influences service delivery, is crucial for delivering financial services to their customers. The analysis presents three key themes: service update, preparation and delivery. Banks use Twitter to highlight updates about their services, provide information on measures to support the ongoing transition to online banking and communicate changes implemented to improve service delivery. This study provides theoretical and managerial implications for stakeholders interested in financial services management, information technology management and customer behaviour.

This chapter investigates a shock transmission path between a home country (a country where globalized banks’ headquarters are located) and a host country (Indonesia as the emerging market) through the lending channel of global banks’ local branches (i.e., the internal transfer channel). Using novel data of monthly individual foreign bank’s balance sheet in Indonesia, the author finds the evidence that shocks to a parent bank and a home economy are transmitted to a host economy through the foreign banks’ internal capital market. With the Indonesia banks’ capital injections and their difficulty in financing dollar funds without risk premiums since the 1998s crisis, the foreign banks’ dollar lending in Indonesia is a good showcase of internal capital markets. A change in a home stock market index and industrial production appears to have a negative effect on growth rates in foreign currency loans of foreign banks in the host market. On the other hand, high growth rates in the parent bank’s stock price in the home market lead to an increase in foreign banks’ US dollar lending in the host country. This effect does not appear in local currency lending because limited hedging instruments against foreign exchange risk results in immobility of bank capital in the local currency.