Measuring the Degree of Internationalization for Taiwanese Banking Industry: Scoring Measurement by Principal Component Analysis

Abstract

This paper mainly focuses on researching and measuring the effects concerning the degree of internationalization (DOI) within the Taiwanese banking industry, with particular application of the scoring measurement by principal component analysis (PCA). The empirical results indicate that there exits an increasing trend for the DOI of Taiwanese banking industry as measured by FATA (each bank’s overseas assets over its own total assets), FETE (each bank’s overseas equities over its own total equities), FSTS (each bank’s overseas sales over its own total sales) and FBTB (each bank’s overseas facilities and operating units over its own total operating units). Under the Box-cox transformation, the DOI scoring index as percentage level (%) from 0 to 100 shows that the relevance of the variables are mostly above 50, indicating that the DOI of the observed Taiwanese banks are quite strong. Thus, the results support the existence and importance of the DOI for current Taiwanese financial institutions, while presenting complimentary and more realistic information regarding the degree of internationalization for Taiwanese banks. At the same time, providing substantial groundwork and adding value to future international management research and investigations that could help representatives of government and management decision makers to achieve better investment decision-making for business strategies and prompt international expansion.