What drives cross-border bank expansion? Answers from Kenya

19 February 2016
Publication Type: Working Paper
JEL Code: F23, F65, G15, G21

This paper investigates the drivers of bank foreign expansion in East Africa. Our results support the view that institutional quality is vital at the planning phase of banks’ going-abroad decision but its importance is muted once the decision has been taken. Second, relatively competitive markets and weak market power at home seem to “push” banks abroad. Third, banks seek to exploit the benefits of their relative efficiency through regional expansion. Fourth, relatively higher foreign country inflation is a deterrent to banks expansion abroad. Finally, desire for greater earnings, economic integration, and follow-the-client hypothesis do not explain banks’ foreign expansion decisions.

Series title: Working paper 584
1 February 2016
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