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Article
Publication date: 8 May 2018

Luiz Paulo Lopes Fávero, Marco Aurélio dos Santos and Ricardo Goulart Serra

Branching is not the only way for foreign banks to enter a national market, and it is impractical when there are informational and cultural barriers and asymmetries among…

Abstract

Purpose

Branching is not the only way for foreign banks to enter a national market, and it is impractical when there are informational and cultural barriers and asymmetries among countries. The purpose of this paper is to analyze the determinants of cross-border branching in the Latin American banking sector, a region with regulatory disparity and political and economic instability, offering elements to a grounded strategic decision.

Design/methodology/approach

This study uses data from six Latin American countries. To account for the preponderance of zero counts, classes of zero-inflated models are applied (Poisson, negative binomial, and mixed). Model fit indicators obtained from differences between observed and estimated counts are used for comparisons, considering branches in each region established by banks from every other foreign region of the sample.

Findings

Branching by foreign banks is positively correlated with the population, GDP per capita, household disposable income, and economic freedom score of the host country. The opposite holds for the unemployment rate and entry regulations of the host country.

Originality/value

Few paper address cross-border banking in emerging economies. This paper analyzes cross-border branching in Latin America in the context of the current financial integration and bank strategy. Econometrically, its pioneering design allows modeling of inflation of zeros, over-dispersion, and the multilevel data structure. This design allowed testing of a novel country-level variable: the host country’s economic freedom score.

Details

International Journal of Bank Marketing, vol. 36 no. 3
Type: Research Article
ISSN: 0265-2323

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Article
Publication date: 27 February 2007

Andy Mullineux

To explore the implications of financial sector convergence for corporate governance systems.

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Abstract

Purpose

To explore the implications of financial sector convergence for corporate governance systems.

Design/methodology/approach

Globalisation, regulatory harmonisation and pensions reform are driving convergence of bank and market oriented systems of corporate finance towards a hybrid model (“hybridisation”). Given the importance of financial systems in corporate governance, this may lead to convergence of corporate governance systems; legal traditions notwithstanding.

Findings

The growth in the importance of funds (pension, insurance, mutual, hedge, venture capital) and the decline in the importance of bank as shareholders has the potential for forcing convergence in corporate governance if the funds actively use their shareholder (or proxy) voting rights. Data on financial institution voting patterns is required to test the hypothesis.

Originality/value

Hybridisation is increasingly widely recognised, although not universally supported by the data. This paper attempts to draw the implication of the hybridisation process for corporate governance given the breakdown of traditional market and bank‐based systems.

Details

Journal of Financial Regulation and Compliance, vol. 15 no. 1
Type: Research Article
ISSN: 1358-1988

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Content available
Article
Publication date: 4 November 2013

Clas Wihlborg

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2147

Abstract

Details

Journal of Financial Economic Policy, vol. 5 no. 4
Type: Research Article
ISSN: 1757-6385

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Article
Publication date: 1 July 1999

Peter S. Rose

Notes increasing consolidation of the banking industry in the USA, Western Europe and Japan; and presents a study of 1980‐1994 acquisitions of US banks by large interstate…

Abstract

Notes increasing consolidation of the banking industry in the USA, Western Europe and Japan; and presents a study of 1980‐1994 acquisitions of US banks by large interstate banking firms. Considers possible motives for cross‐border expansion, reviews relevant research and compares the performance of target banks with their local competitors and their buyers; and buyers’ performance with their competitors. Finds that most buyers are located in rich, densely populated states and most targets in states which have traditionally restricted bank branching activity; that buyers and targets have very different performance profiles (although some differences gradually reduce after acquisition); and that local market influences have a greater effect than common ownership. Concludes that targets are selected for their location and expected future performance, with possible diversification benefits.

Details

Managerial Finance, vol. 25 no. 7
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 27 March 2020

Martin Boďa and Katarína Čunderlíková

This paper studies the density of bank branches in districts of Slovakia and aims to identify determinants that explain or justify districtural differences in the density…

Abstract

Purpose

This paper studies the density of bank branches in districts of Slovakia and aims to identify determinants that explain or justify districtural differences in the density of bank branches.

Design/methodology/approach

Bank branch density is measured by the number of branches in a district, and banks are further differentiated by size and profile. Potential determinants of bank branch density are sought through univariate and bivariate Poisson regressions amongst economic factors, socioeconomic factors, technological factors, urbanization factors, and branch market concentration.

Findings

Using data from 2016, it has been found that branch numbers in districts are determined chiefly by five factors that describe their economic development, population size with its characteristics, and existent branch concentration. The spatial distribution of bank branches in the territory of Slovakia is not random, but is found to be affected by environmental factors measurable at the districtural level. Only 22 Slovak districts representing administrative or economic centers are expected to be over-branched.

Practical implications

The study helps to identify factors that need be accounted for in planning and redesigning of branch networks or in implementing mergers and acquisitions on a bank level. The results are also useful in regional policy and regulatory oversight.

Originality/value

The present study is unique since the decision-making processes of Slovak commercial banks in planning the location and density of their branch networks have not been rationalized and researched as of yet.

Details

International Journal of Bank Marketing, vol. 38 no. 4
Type: Research Article
ISSN: 0265-2323

Keywords

Open Access
Article
Publication date: 13 May 2021

Lucia Gibilaro and Gianluca Mattarocci

This paper aims to examine the relevance of cross-border activity in the European banking sector, evaluating the role of differences in regulation to explain the level of…

Abstract

Purpose

This paper aims to examine the relevance of cross-border activity in the European banking sector, evaluating the role of differences in regulation to explain the level of interest in entering foreign markets.

Design/methodology/approach

The sample considers all banks in the European Union (EU 28) existing at year-end 2017, and information about the ultimate owners’ nationality to classify local and foreign banks is collected. The analysis provides a mapping of regulatory restrictions for foreign banks and evaluates how they impact the role of foreign players in the deposit and lending markets.

Findings

Results show that the lower are the capital adequacy requirements, the higher are the amounts of loans and deposits offered by non-European Economic Area banks and, additionally, the higher the probability of having a foreign bank operating in the country.

Originality/value

This paper provides new evidence on regulatory arbitrage opportunities in the EU and outlines differences among EU countries not previously studied.

Details

Journal of Financial Regulation and Compliance, vol. 29 no. 3
Type: Research Article
ISSN: 1358-1988

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Book part
Publication date: 25 July 2008

Eric J. Neuman, Gerald F. Davis and Mark S. Mizruchi

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…

Abstract

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.

Details

Network Strategy
Type: Book
ISBN: 978-0-7623-1442-3

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Book part
Publication date: 1 January 2006

Edward C. Boyer and Jongmoo Jay Choi

The financial services industry is experiencing rapid consolidation globally. Consolidation has proceeded not only in the same market but also across different market…

Abstract

The financial services industry is experiencing rapid consolidation globally. Consolidation has proceeded not only in the same market but also across different market segments and across national boundaries. In this paper, we (a) outline the general trend of the mergers and acquisitions (M&As) and consolidation of the financial service industry in the U.S. and in the global economy; (b) identify and analyze the reasons that contribute to the consolidation of the financial service industry; (c) examine some cases of successful and unsuccessful financial service M&As; and (d) arrive at some strategic implications.

Details

Value Creation in Multinational Enterprise
Type: Book
ISBN: 978-1-84950-475-1

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Book part
Publication date: 1 January 2005

James A. Wilcox

Deregulation and other factors permit and encourage financial institutions to become more integrated, both within their own (financial) industries, such as banking and…

Abstract

Deregulation and other factors permit and encourage financial institutions to become more integrated, both within their own (financial) industries, such as banking and insurance, and across these industries. Financial regulators have responded with like integration. As financial institutions increasingly compete with firms from other industries and areas, financial regulators similarly compete more across borders. The resulting competition in financial regulation enhances innovation, choice, and efficiency. The advent of home-run regulation, which in general allows financial institutions to adhere only to the financial regulations of their home area and is spreading across the US and Europe, may allow numerous regulatory regimes within a given market.

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Research in Finance
Type: Book
ISBN: 978-0-76231-277-1

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Article
Publication date: 1 April 2000

Joseph G. Nellis, Kathleen M. McCaffery and Robert W. Hutchinson

Completion of the European Single Market Programme in Financial Services has, as expected, set in motion a rationalisation process within the European banking industry…

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6214

Abstract

Completion of the European Single Market Programme in Financial Services has, as expected, set in motion a rationalisation process within the European banking industry, as banks respond to increasing competitive pressures that are having a dampening effect on their traditional business margins. Assesses the importance of these developments in the context of the policy options that are open to the European banking community in the new millennium. In particular, given the prospect of an integrated European economy, now commonly referred to as Euroland, the paper addresses, as its central theme, the potential for the development of pan‐European banks that would then be in a position to configure longer‐term globalisation strategies. Evolution in this direction, if it occurs, is important from a European Central Bank policy perspective, since it would raise systemic risk issues if a small number of European licensed banks became “too big to fail”. We conclude, however, that the most prominent strategic response is likely to be based on the European “regionalisation” of banks and markets rather than pan‐Europeanisation.

Details

International Journal of Bank Marketing, vol. 18 no. 2
Type: Research Article
ISSN: 0265-2323

Keywords

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