Internationalization and Economic Value-Added in Deposit Money Banks in Selected African Countries

Abstract

The desire for banking investment expansions and taking economic, competitive benefits within domestic operations seemed inundated with market saturation limitations, necessitating international operations. Studies have advanced that banks take advantage of the internationalization of banking services to increase operational capacities and in search of new opportunities. Inconsistencies and mixed results have been reported on the extent of the effect of internationalization on the economic value-added of banks. This study investigated the effect of internationalization on value creation in Deposit Money Banks (DMBs) in selected African countries. The study adopted an expo facto research design. The population consisted of seventy-one Deposit Money Banks (DMBs) in selected African countries of South Africa, Kenya, and Nigeria as of 31 December 2021. Seventeen DMBs were selected using a purposive sampling technique. Data were extracted from published financial statements of selected DMBs. The validity and reliability of the data were premised on the statutory audit of the financial statements. Descriptive and inferential (multiple regression) statistics were used to analyze the data. The study revealed that the economic value-added of DMBs was significantly affected by internationalization. (Adj.R2 = 0.3856; F(5, 249) = 75.62; p<0.05). The study recommended that banks should be strategic and conduct detailed due diligence and internationalization benefits analysis before venturing into international banking operations. Management of banks should not hurriedly embark on international banking for egocentric purposes but be sure that the venture will optimize and add to the banks' shareholders and the other stakeholders. The management of the banks should review and re-engineer the dynamics of foreign operations.