Business Commons^™

Three Essays On Banking Foreign Direct Investment, Tamrat Workalemahu Gashaw

Dissertations

This dissertation investigates three aspects of banking foreign direct investment (BFDI). One striking development in the banking sector over the past two decades is the significant increase in BFDI. Multinational banks are now major players in the global financial system in terms of their asset positions, loan amounts, and operational scales. Despite this significant trend in BFDI, few empirical studies exist explaining observed international BFDI trends.

The first essay investigates the factors determining a bank’s decision to invest abroad. I first develop a two-asset portfolio selection model to identify determinant factors, and then employ a three-way error component model for …

Outsourcing Central Banking: Lessons From Estonia, Sarkis Joseph Khoury, Clas Wihlborg

Business Faculty Articles and Research

An orthodox currency board (CB) renders central banking redundant for interest and exchange rate determination. Thereby, monetary policy is de facto outsourced. Foreign direct investment (FDI) in banking can lead to outsourcing of the second important central bank function, responsibility for banking supervision. Economic and political conditions for outsourcing of central banking are discussed. Estonia's experience with a CB and expanding foreign involvement in banking is reviewed. The Argentine CB experience is discussed briefly to provide a contrast. The conclusion outlines the conditions for successful currency outsourcing to another country or regional authority.

Financial Crises And The Presence Of Foreign Banks, Adrian E. Tschoegl

Adrian E Tschoegl

Foreign banks have entered many transition and emerging economies in recent years, sometimes before economic and banking crises have developed, and often after. Today, in a number of countries foreign banks own as much as 90 per cent or more of the banking systems’ assets. The question then arises as to what the effect of the foreign presence is on crises. This chapter first discusses the motives, modes and regulation of foreign banks. In analyzing foreign entry, it is important to distinguish between classic or traditional foreign banks and the innovators, which in turn one can classify either as “bettors”, …

Foreign Banks In Bulgaria, 1875-2002, Adrian E. Tschoegl, Kenneth Koford

Adrian E Tschoegl

We apply the analogy from biology of ecological succession that follows natural disasters as a conceptual framework for the history of foreign banks in Bulgaria. We argue that the current predominance of foreign banks is unlikely to be permanent, even without government action. The argument should also apply to other countries that have incurred sever financial collapse. In the case of Bulgaria, foreign banks have entered several times—before World War I, after that war, and after the fall of Communism in the early 1990s. The same source countries and even some of the same banks that were present before World …