An Eclectic Theory of Cross-Border Entry in Retail Financial Services

Abstract

The post-war multinationalisation process in manufacturing industries has been the subject of frequent theoretical and empirical scrutiny. Cross-border entry activities in financial services, however, which have undergone a similarly significant expansion process have attracted much less attention in the academic literature. Existing studies on financial services focus almost exclusively on cross-border entry in wholesale and investment banking and not on retail financial services. This chapter therefore develops an eclectic theory of cross-border entry in retail financial services and the focus of the analysis is thereby placed on three crucial questions: Why does a financial services firm enter a foreign market, i.e. what competitive advantage may compensate a firm, for operating at a distance and in a foreign environment? Where does a financial services firm enter a foreign market, i.e. what particular host and home country characteristics induce cross-border entry? How does the financial services firm enter, i.e. which environmental and strategic factors determine the choice of cross-border entry vehicles? KeywordsForeign Direct InvestmentTransaction CostFinancial ServiceForeign MarketForeign FirmThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.