Foreign Bank Penetration of Newly Opened Markets in the Nordic Countries

Lars Engwall, Rolf Marquardt, Torben Pedersen, Adrian E. Tschoegl

    Research output: Working paperResearch

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    Abstract

    The opening to foreign banks in Denmark, Finland, Norway and Sweden provides us with an opportunity to study entry, survival and success in a situation where the entrants were subject to the liability of foreignness but not the liability of newness. We find that despite low survival rates, on balance the entrants gained market share (in terms of the assets of the banking system) over time. Our results for the role of time, links to the home market and problems facing domestic competitors were strongly in accordance with expectations in the cases of Denmark, mixed or indeterminate for Finland and Norway, and strongly opposite in the case of Sweden. Lastly, our results are broadly consistent with the Stiglitz-Weiss argument that new entrants, in this case foreign banks, buy entry by accepting worse lending risks.
    Original languageEnglish
    Place of PublicationCopenhagen
    PublisherDepartment of International Economics and Management, Copenhagen Business School
    Number of pages38
    Publication statusPublished - 1999
    SeriesWorking Paper / Department of International Economics and Management, Copenhagen Business School
    Number2-1999

    Keywords

    • Entry
    • Foreign banks
    • Nordic countries

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