To What Extent Will the Banking Industry Be Globalized? A Study of Bank Nationality and Reach in 20 European Nations

38 Pages Posted: 29 May 2002

See all articles by Allen N. Berger

Allen N. Berger

University of South Carolina - Darla Moore School of Business; Wharton Financial Institutions Center; European Banking Center

Qinglei Dai

Universidade Nova de Lisboa - Faculdade de Economia

Steven Ongena

University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; Centre for Economic Policy Research (CEPR)

David C. Smith

University of Virginia - McIntire School of Commerce

Date Written: May 2002

Abstract

We model two dimensions of bank globalization - bank nationality (a bank from the firm's host nation, its home nation, or a third nation) and bank reach (a global, regional, or local bank) - using a two-stage nested multinomial logit model. Our data set includes over 2,000 foreign affiliates of multinational corporations operating in 20 European nations. We find that these firms frequently use host nation banks for cash management services, and that bank reach may be strongly influenced by this choice of bank nationality. Our results suggest limits to the degree of future bank globalization.

Keywords: Bank, Globalization, Europe, Mergers

JEL Classification: G21, G15, G28, G34

Suggested Citation

Berger, Allen N. and Dai, Qinglei and Ongena, Steven R. G. and Smith, David Carl, To What Extent Will the Banking Industry Be Globalized? A Study of Bank Nationality and Reach in 20 European Nations (May 2002). FEDS International Finance Discussion Paper No. 725. Available at SSRN: https://ssrn.com/abstract=311524 or http://dx.doi.org/10.2139/ssrn.311524

Allen N. Berger

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States
803-576-8440 (Phone)
803-777-6876 (Fax)

Wharton Financial Institutions Center

Philadelphia, PA 19104-6367
United States

European Banking Center

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Qinglei Dai

Universidade Nova de Lisboa - Faculdade de Economia ( email )

Campus de Campolide
Lisboa, 1099-032
Portugal

Steven R. G. Ongena

University of Zurich - Department of Banking and Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

David Carl Smith (Contact Author)

University of Virginia - McIntire School of Commerce ( email )

P.O. Box 400173
Charlottesville, VA 22904-4173
United States

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