Why and How: The Internationalization of the Banking Sector

  • Federica Sist
Chapter

Abstract

This chapter analyzes why banks internationalize. This activity should be developed through certain forms, implying that banks undertake activities abroad in several ways: by themselves or alongside other partners, within the form of an equity or non-equity deal. A bank can do so in order to follow domestic clients operating in foreign markets, to expand markets, to increase profit or to take advantage of different regulatory systems. If the decision to internationalize requires a high degree of penetration, the strategy selected for entering the market or consolidating its position will consequently require a higher involvement in ownership, resources and risks. Branches and subsidiaries are ways to internationalize with high involvement through both non-equity and equity deals (joint ventures, minority or majority acquisitions) or through Greenfield. The reconnaissance of literature helps to understand the opportunities available to banks.

Keywords

International banking Internationalization Equity deals Non-equity deals Affiliates Branches Subsidiaries 

References

  1. Amici, A., F. Fiordelisi, F. Masala, O. Ricci, and F. Sist. 2013. Value creation in banking through strategic alliances and joint ventures. Journal of Banking & Finance 37: 1386–1396.CrossRefGoogle Scholar
  2. Ball, C.A., and A.E. Tschoegl. 1982. The decision to establish a foreign bank branch or subsidiary: An application of binary classification procedures. Journal of financial and Quantitative Analysis 17: 411–424.CrossRefGoogle Scholar
  3. Berger, A.N., R. DeYoung, H. Genay, and G.F. Udell. 2000. Globalization of financial institutions: Evidence from cross-border banking performance. Brookings-Wharton Papers on Financial Services 2000: 23–120.CrossRefGoogle Scholar
  4. BIS. 2001. 71st Annual Report, 2000/01.Google Scholar
  5. Brealey, R.A., and E.C. Kaplanis. 1996. The determination of foreign banking location. Journal of International Money and Finance 15: 577–597.CrossRefGoogle Scholar
  6. Buch, C.M., C.T. Koch, and M. Koetter. 2011. Size, productivity, and international banking. Journal of International Economics 85: 329–334.CrossRefGoogle Scholar
  7. Cetorelli, N., and L.S. Goldberg. 2012. Banking globalization and monetary transmission. The Journal of Finance 67: 1811–1843.CrossRefGoogle Scholar
  8. Chan, S.H., J.W. Kensinger, A.J. Keown, and J.D. Marin. 1997. Do strategic alliances create value? Journal of Financial Economics 46: 199–221.CrossRefGoogle Scholar
  9. Chang, E.P., J.J. Chrisman, and F.W. Kellermanns. 2011. The relationship between prior and subsequent new venture creation in the United States: A county level analysis. Journal of Business Venturing 26: 200–211.CrossRefGoogle Scholar
  10. Chiou, I., and L.J. White. 2005. Measuring the value of strategic alliances in the wake of a financial implosion: Evidence from Japan’s financial services sector. Journal of Banking and Finance 29: 2455–2473.CrossRefGoogle Scholar
  11. Clarke, G.R., R. Cull, and M.S.M. Peria. 2006. Foreign bank participation and access to credit across firms in developing countries. Journal of Comparative Economics 34: 774–795.CrossRefGoogle Scholar
  12. De Bonis, R., G. Ferri, and Z. Rotondi. 2015. Do firm–bank relationships affect firms’ internationalization? International Economics 142: 60–80.CrossRefGoogle Scholar
  13. ECB. 2007. Financial integration in Europe.Google Scholar
  14. Erramilli, M.K., and C.P. Rao. 1993. Service firms’ international entry-mode choice: A modified transaction-cost analysis approach. The Journal of Marketing 57: 19–38.CrossRefGoogle Scholar
  15. Focarelli, D., and A.F. Pozzolo. 2005. Where do banks expand abroad? An empirical analysis. Journal of Business 78: 2435–2463.CrossRefGoogle Scholar
  16. FSB. 2018. Global Shadow Banking Monitoring Report 2017.Google Scholar
  17. Gleason, K.C., I. Mathur, and R.A. Wiggins. 2003. Evidence on value creation in the financial services industries through the use of joint ventures and strategic alliances. The Financial Review 38: 213–234.CrossRefGoogle Scholar
  18. Gleason, K.C., J. Madura, and J. Wiggenhorn. 2006. Operating characteristics, risk, and performance of born-global firms. International Journal of Managerial Finance 2 (2): 96–120.CrossRefGoogle Scholar
  19. Goldberg, L.S. 2009. Understanding banking sector globalization. IMF Staff Papers 56: 171–197.CrossRefGoogle Scholar
  20. Gulati, R. 1998. Alliances and networks. Strategic Management Journal 19: 293–317.CrossRefGoogle Scholar
  21. Lei, D., and J.W. Slocum Jr. 1992. Global strategy, competence-building and strategic alliances. California Management Review 35: 81–97.CrossRefGoogle Scholar
  22. Liang, H.Y., Y.P. Ching, and K.C. Chan. 2013. Enhancing bank performance through branches or representative offices? Evidence from European banks. International Business Review 22: 495–508.CrossRefGoogle Scholar
  23. Marciukaityte, D., K. Roskelley, and H. Wang. 2009. Strategic alliances by financial services firms. Journal of Business Research 62: 1193–1199.CrossRefGoogle Scholar
  24. McCauley, R., P. McGuire, and G. von Peter 2010. The architecture of global banking: From international to multinational? BIS Quarterly Review.Google Scholar
  25. Molyneux, P., L.H. Nguyen, and R. Xie. 2013. Foreign bank entry in South East Asia. International Review of Financial Analysis 30: 26–35.CrossRefGoogle Scholar
  26. Owen, S., and A. Yawson. 2013. Information asymmetry and international strategic alliances. Journal of Banking & Finance 37: 3890–3903.CrossRefGoogle Scholar
  27. Sist, F., M. Caratelli, and C. Giannotti. 2017. Consulenza finanziaria, digitale e Fintech. Bancaria Editrice 11: 72–78.Google Scholar
  28. Slager, A. 2006. The internationalization of banks: Patterns, strategies and performance. New York: Palgrave Macmillan.CrossRefGoogle Scholar
  29. Ul-Haq, R., and B. Howcroft. 2007. An examination of strategic alliances and the origins of international banking in Europe. International Journal of Service Industry Management 18 (2): 120–139.CrossRefGoogle Scholar

Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Federica Sist
    • 1
  1. 1.Libera Università Maria SS. AssuntaRomeItaly

Personalised recommendations