Multinational Banks and Foreign Expansion Decisions

verfasst von: Cansu Eray

Verlag: Springer International Publishing

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

This book presents a systematic review of the literature on the foreign expansion decisions of multinational banks (MNBs). With today's increasing level of globalization, many banks have expanded their activities internationally to take advantage of new opportunities in different markets. As each extension strategy brings distinctive benefits and challenges, finding an optimal approach to internationalization plays a crucial role in maximizing the advantages while decreasing the drawbacks under changing conditions. After screening 141 papers, 28 articles from leading international research journals were selected according to defined criteria in order to provide a synthesized framework connecting MNBs’ decisions to enter foreign markets with the reasons and consequences.

The book argues that the MNBs’ main motivations for foreign expansion are related to location and ownership factors. Based on the priorities of these motives, MNBs can choose cross-border lending, greenfield investment or acquisition as an entry mode. Since each has its own benefits and challenges, the chosen strategy has further implications for both the profitability of MNBs and the economic conditions of the host country regarding the competition level, lending pattern to small and medium enterprises (SMEs), market interest rates and financial stability.

After establishing a link between the main drivers of foreign expansion, the entry mode choices, and the impacts of foreign bank presence in the host country, the book offers managers of MNBs insights into the further implications. Highlighting the gaps in literature, it also appeals to researchers looking for future areas of study.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction to Foreign Expansion Decisions of Multinational Banks

Abstract

In today’s increasing level of globalization, many banks have expanded their activities internationally to take advantage of new opportunities in different markets. As each extension strategy brings distinctive benefits and challenges, founding an optimal approach of internationalization plays a crucial role in making most of the profit while decreasing drawbacks in altering conditions. This study aims to explore the main entry strategies of multinational banks (MNBs) to distant markets to analyze optimal decisions on foreign expansion strategies by examining fundamental motivations in behind, and further effects of chosen approach. The systematic literature review methodology applied to this study to provide well-structured information about foreign expansion decisions of MNBs. The five main keywords researched in two designated databases to obtain the scope of the study. As a result of screening 141 papers from this search, 28 articles selected according to inclusion and exclusion criteria. There were three main inclusion criteria: relevancy of topic, timeframe, and language. After searching defined keywords, only related papers which conducted in last 15 years in English included in the scope of this project. As exclusion criteria, three main concerns are taken into consideration: quality, objectivity, and academic level. Thus, only papers published in recognized international journals included while biased and non-research papers excluded in this systematic review. The review scheme also designed on “Reasons-Phenomenon-Consequences” structure to show the logic behind applied strategies of MNBs in the overseas market.

Cansu Eray

Chapter 2. Main Motivations of MNBS to Expand Abroad

Abstract

As a result of the review, the main “reasons” of MNBs’ foreign expansion decisions concluded in two main motivations as location-specific factors and ownership-specific factors. Home and host country integration, market opportunities in the host country, and host country regulations classified under location-based drivers while size, efficiency and performance, and home country regulations fall under ownership-specific factors. (An overview of the articles covered under the “reasons” category of the review scheme that explains the main motivations of MNBs’ foreign expansion decisions presented in Tables 5.1 and 5.2 with respect to location, ownership-specific factors in a row. These tables located in Chapter 5.)

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Chapter 3. Enrty Decisions of Multinational Banks (MNBs)

Abstract

After analyzing the reasons of foreign expansion for MNBs in Chapter 2, now, their decision-making process on entry strategies explained in this chapter as “phenomenon.” Foreign banks decide how to enter a distant market by considering many alternative strategies concerning their main motivation for foreign expansion, a further competitive advantage in the market, and host country conditions. However, the priorities of MNBs in the overseas market determine the entry mode. The needs to access local resources, especially soft information, and control desire over foreign entry are the main consideration points in the decision-making process of entry mode choices. In some situations, host countries may shape the decisions of foreign penetration throughout special implications such as providing incentives, requiring specific adjustments, or simply limiting activities by regulations. This chapter explains possible entry mode options for MNBs in the distant market with regard to the interests of both foreign banks and host countries. According to the priorities of foreign motives, MNBs can choose cross-border lending, greenfield investment, or acquisition as an entry mode. After examining the types of entry in altering conditions, effects of senior managers on decision-making process follow the pattern of internationalization for entry modes of MNBs. (In the following chapters, Table 5.3 shows to the pros and cons of distinctive entry strategies. It is located in Chapter 5 to evaluate managerial implications more deeply via summary of previous chapters.)

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Chapter 4. Impacts of Foreign Entry to Host Country and Further Implications for MNBs

Abstract

After examining entry mode strategies as phenomenon based on the review scheme, their impacts on the host country presented in this chapter by four main categories: competition, lending to small-medium enterprises (SMEs), market interest rates, and financial stability. Understanding the “consequences” of chosen entry mode helps MNBs to predict possible regulatory changes in the host country for the long run because the policymakers consider these impacts to protect the interests of host market while deciding future regulations (An overview of the findings for studies covered by “consequences” category under the review scheme presented in Table 5.4 to show the impacts of foreign presence to host country deeply).

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Chapter 5. An Overview for MNBs Foreign Expansion Strategies

Abstract

After establishing a bridge among the main drivers of foreign expansion of MNBs, their entry mode choices, and the impacts of foreign bank presence in the host country within “Reasons-Phenomenon-Consequences” structure, the book reaches to this chapter that summarizes each topic in individual chapters by tables that show main findings in the current literature critically. In doing so, it provides a guideline to senior managers of MNBs for further implications, while presenting the gap in the existing body of literature to scholars for future studies.

Cansu Eray

Backmatter

Titel: Multinational Banks and Foreign Expansion Decisions
verfasst von: Cansu Eray
Verlag: Springer International Publishing
Electronic ISBN: 978-3-030-36879-1
Print ISBN: 978-3-030-36878-4
DOI: https://doi.org/10.1007/978-3-030-36879-1