Choice of scale by banks in financial centers
The paper develops a theoretical link between foreign investment, scale and reversibility in the banking industry. This link is used to formulate hypotheses that are empirically examined with a unique data set collected through interviews with senior managers of multinational banks in London. Findings reveal that banks do not set up large operations to service domestic customers or get a foothold, but do so to create hubs. Banks with confident beliefs set up large operations, and use large offices to lock themselves into the market. These results explain the cross-sectional variation in the size of foreign investments in the industry. Robustness checks do not reveal presence of influential data points; regressions are stable over time and consistent with what we know from secondary samples.
Year of publication: |
2007
|
---|---|
Authors: | Gulamhussen, Mohamed Azzim |
Published in: |
International Business Review. - Elsevier, ISSN 0969-5931. - Vol. 16.2007, 4, p. 507-525
|
Publisher: |
Elsevier |
Keywords: | International investment Financial institutions and services |
Saved in:
Online Resource
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