What Drives Foreign Expansion of the Top 100 Multinational Banks? The Role of the Credit Reporting System

44 Pages Posted: 24 Aug 2009 Last revised: 9 Nov 2009

See all articles by Hsiangping Tsai

Hsiangping Tsai

Yuan Ze University - College of Management

Yuanchen Chang

National Chengchi University - College of Commerce

Pei-Hsin Hsiao

Yuan Ze University - College of Management

Date Written: November 7, 2009

Abstract

This study explores how information costs in host countries affected foreign expansion of the top 100 multinational banks from 2001 to 2007. Indices representing characteristics of credit reporting systems are used to proxy for banks' information costs in 103 host countries. We find that banks are more likely to enter or expand operations in countries where a credit bureau exists and where credit reports shared within the credit system are of better quality in terms of timeliness, accuracy, and completeness. Overall, our results indicate that banks are attracted to countries where the credit reporting system helps reduce banks' information costs.

Keywords: Banks, Credit Information Sharing, Foreign Expansion, Location Decision

JEL Classification: G21, D82, F23

Suggested Citation

Tsai, Hsiangping and Chang, Yuanchen and Hsiao, Pei-Hsin, What Drives Foreign Expansion of the Top 100 Multinational Banks? The Role of the Credit Reporting System (November 7, 2009). 22nd Australasian Finance and Banking Conference 2009, Available at SSRN: https://ssrn.com/abstract=1459882 or http://dx.doi.org/10.2139/ssrn.1459882

Hsiangping Tsai (Contact Author)

Yuan Ze University - College of Management ( email )

135, Far-East Rd., Chung-Li
Taoyuan, ROC
Taiwan

Yuanchen Chang

National Chengchi University - College of Commerce ( email )

Taiwan
886229393091-81102 (Phone)
886229393394 (Fax)

Pei-Hsin Hsiao

Yuan Ze University - College of Management ( email )

135, Far-East Rd., Chung-Li
Taoyuan, ROC
Taiwan

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