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The entry and exit decisions of foreign banks in Hong Kong

Author

Listed:
  • Man K. Leung

    (School of Accounting and Finance, Hong Kong Polytechnic University, Hong Kong)

  • Trevor Young

    (Economics, School of Social Sciences, University of Manchester, Manchester, UK)

  • Michael K. Fung

    (School of Accounting and Finance, Hong Kong Polytechnic University, Hong Kong)

Abstract

This paper presents a theoretical framework for explaining the entry and exit decisions of a firm, motivated by the differential returns in its home and a host market. Within this framework, the factors underpinning the entry and exit decisions of foreign banks in Hong Kong are examined, using a duration (accelerated failure time) model. It can be seen that a foreign bank, with international experience from having more overseas markets will take a shorter (longer) time to enter (exit) the Hong Kong market. Faster (slower) growth both in home trade with Hong Kong and in the Hong Kong banking sector itself will increase the likelihood of entry (exit). Ceteris paribus, Asian banks enter at a faster rate and survive longer in the Hong Kong market. Copyright © 2008 John Wiley & Sons, Ltd.

Suggested Citation

  • Man K. Leung & Trevor Young & Michael K. Fung, 2008. "The entry and exit decisions of foreign banks in Hong Kong," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(6), pages 503-512.
    • Handle: RePEc:wly:mgtdec:v:29:y:2008:i:6:p:503-512
    DOI: 10.1002/mde.1414
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    References listed on IDEAS

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    3. Krzysztof Jackowicz & Oskar Kowalewski, 2011. "Divestments in Banking. Preliminary Evidence on the Role of External Factors," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 5(2), June.

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