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National culture, market condition and market share of foreign bank

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  • Xue, Minggao
  • Cheng, Wen

Abstract

In the paper, based on Breuer and McDermott's (2011) definition for national culture, we develop a theoretical model that helps explain economical behaviors of foreign bank and show that national culture is as important as credit market conditions in determining market share of foreign banks. Our model yields two interesting results. One is that market share of foreign banks is always lower than domestic banks in emerging market. Another is that in enterprise and heterogeneous society, foreign banks are likely to extend their market shares during recession in transition economies, not during prosperous one. Our theoretical findings also provide an explanation for empirical observation from Chinese emerging market.

Suggested Citation

  • Xue, Minggao & Cheng, Wen, 2013. "National culture, market condition and market share of foreign bank," Economic Modelling, Elsevier, vol. 33(C), pages 991-997.
  • Handle: RePEc:eee:ecmode:v:33:y:2013:i:c:p:991-997
    DOI: 10.1016/j.econmod.2013.06.025
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    Cited by:

    1. Sangwook Lee & Sang Hoo Bae & Inshik Seol, 2019. "Loan relation with foreign banks and information asymmetry: evidence from earnings management by local firms in Korea," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 43(2), pages 344-366, April.
    2. Bakas, Dimitrios & Kostis, Pantelis & Petrakis, Panagiotis, 2020. "Culture and labour productivity: An empirical investigation," Economic Modelling, Elsevier, vol. 85(C), pages 233-243.
    3. Chang, Chih-Hsiang & Lin, Shih-Jia, 2015. "The effects of national culture and behavioral pitfalls on investors' decision-making: Herding behavior in international stock markets," International Review of Economics & Finance, Elsevier, vol. 37(C), pages 380-392.

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