فرهنگ ملی، وضعیت بازار و سهم بازار از بانک خارجی
|کد مقاله||سال انتشار||تعداد صفحات مقاله انگلیسی||ترجمه فارسی|
|14462||2013||7 صفحه PDF||سفارش دهید|
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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Economic Modelling, Volume 33, July 2013, Pages 991–997
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.
The objective of this paper is to provide a theoretical framework 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. The subject of whether foreign banking participation does influence the stability of domestic financial market has drawn considerable attention in the recent finance literatures since foreign banks are able to easily relocate funds to different markets with higher expected profits through their internal capital markets. For example, Morgan and Strahan (2004) argue that foreign bank might ‘cut and run’ at the first hint of economic instability and expedite capital flight during crisis. Kroszner et al. (2007) and Dell'Ariccia et al. (2008) show that foreign banks do not mitigate the adverse consequences of local banking crises. However, Dages et al. (2000) and Crystal et al. (2002) find that foreign banks even tend to expand their credit supply under adverse economic conditions from a subsample of Southern American countries. How can this behavior of foreign banks be explained theoretically? Foreign bank's market share could better characterize foreign bank's behaviors. For example, when the market share of foreign bank equal to zero, it is shown that foreign bank will not enter the emerging market. When the market share of foreign bank is increasing or decreasing, it is shown that foreign bank extends or reduces his lending in emerging markets. This paper will provide a theoretical framework for such outcomes to analyze the influence of national culture on foreign bank's market share. Most prior work in this area focuses on the effect of a single credit market conditions on market share of foreign bank (Buch, 2003, De Haas and van Lelyveld, 2004, Giannetti and Ongena, 2010, Hainz, 2003, Khanna and Palepu, 2000, Kraft, 2002, Mian, 2006 and Sengupta, 2007). However, Chang et al. (1998) find that foreign banks are hindered by cultural barriers. Sociologists and anthropologists (like Richerson and Boyd (2005)) have accumulated a wealth of evidence on the impact of culture on economic behavior. Until recently, economists have been reluctant to rely on culture as a possible determinant of economic phenomena. Much of this reluctance stems from the very notion of culture: it is so broad and the channels through which it can enter economic discourse are so ubiquitous (and vague) that it is difficult to design testable, refutable hypotheses. Without testable hypotheses, however, there is no role for culture in economics except perhaps as a selection mechanism among multiple equilibriums (Greif, 1994 and Greif, 2006). In recent years, however, economists have begun to apply their analytical frameworks and empirical tools to the issue of culture and economic outcomes. Better techniques and expanded data have made it possible to identify systematic differences in national cultures. As Luigi Guiso et al. (2006) documents, cultural hypotheses can be rigorously tested and are economically important for fundamental economic issues like national rates of saving. Using Hofstede's (2001) four cultural dimensions (uncertainty avoidance, collectivism, power distance, and masculinity) as proxies for culture, and using a sample of 117,723 firm-years from 40 countries over the 1991–2006 period, Zhang et al. (2012) find robust evidence that firms located in countries with high uncertainty avoidance, high collectivism, high power distance, and high masculinity tend to use more short-term debt. They interpret their results as consistent with the view that national culture helps explain cross-country variations in the maturity structure of corporate debt. Fidrmuc and Jacob (2010) present a culturally rooted agency explanation for differences in dividend payout policies around the world. By linking dividends to cultural differences across 5797 firms in 41 countries, their analysis shows that high individualism, low power distance, and low uncertainty avoidance are significantly associated with higher dividend payouts. These above results suggest that importing cultural elements will make economic discourse richer, better able to capture the nuances of the real world, and ultimately more useful. However, theoretical research literature is very little despite having some empirical research works in this area in recent years. To my knowledge, Breuer and McDermott (2011) firstly develop a theoretical model in this area. Our analysis of the role of national culture is motivated mainly by Breuer and McDermott (2011), who assume that individuals in a society are distributed by their loss aversion, according to a well-defined density function, and argue that the first two moments of the distribution within a country – the mean μ and the variance σ2 – reflect fundamental facets of culture. They define cultural homogeneity and heterogeneity by the variance of the distribution of loss aversion. They assume that among cultures that are more diverse along ethnic or religious dimensions, attitudes toward losses will be widely shared than in more ethnically or religiously homogeneous cultures. For example, Japanese culture is considered to be very cautious (high μ) and homogeneous (low σ). US culture is thought to be the opposite — enterprise (low μ) and diverse or heterogeneous (high σ). While Breuer and McDermott's (2011) definition of national culture is not comprehensive, it focuses on fundamental facets of culture that can impact economic outcomes. In this paper, we will include national culture in the model of foreign bank's entry into a new market. The national culture makes the theoretical explanation of the market share of foreign banks in the transition economies richer, better able to capture the nuances of the real world, and ultimately more useful. In the existing literature, there are several approaches to model a bank's into a new market. Usually, it is assumed that foreign banks are imperfectly informed about certain characteristics of borrowers. Dell' Ariccia et al. (1999) use a duopoly model with Bertrand competition to focus on the asymmetric information new entrant face when moving into a new market. One drawback of this type of model is that the equilibrium only exists if banks pursue mixed strategies, which is difficult to interpret in practice. Bouckaert and Degryse (2004) distinguish between soft information about borrowers' abilities and hard information about project outcomes. By introducing switching costs into a Bertrand competition setup, they show the existence of the equilibrium in pure strategies, and illustrate how banks may strategically disclose information about borrowers to new market entrants. Contrary to these duopoly models, Lehner and Schnitzer (2008) use a Hotelling model of spatial competition to analyze the spillover effect on domestic banks after the entry of foreign banks with a superior screening technology. Detragiache et al. (2008) analyze the effect on a competitive equilibrium if a foreign bank enters that has lower costs to monitor hard information, but higher costs to monitor soft information. By assuming that borrowers are loss aversion for switching costs, the model derived in following section is building on the basic structure of Breuer and McDermott (2011). We extend their framework to foreign bank's behavior analysis by including national culture in the model of foreign bank's entry into a new market. The paper is structured as follows. In Section 2 we derive our model. In Section 3, we solve the model for the required equilibrium repayments of both banks (foreign bank and domestic bank), the equilibrium market share for foreign banks and the critical value of foreign bank that enters the new market. In Section 4, we provide a comparative statics analysis of how changes in cultural and economic factors affect the market share of foreign banks and the critical value of foreign banks enter the new market. In Section 5, we present several illustrative cases. In Section 6, we offer some concluding comments.
نتیجه گیری انگلیسی
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. In our model, we assume that domestic banks can distinguish borrower types while foreign bank cannot, but foreign bank has a screening technology available to learn about the quality of the projects while domestic banks have not. Equilibrium market shares of both types of banks and the entry barrier of foreign banks depend on the prevailing credit market conditions and national culture. Our model presents two interesting results. One is that Market share of foreign banks is always lower than domestic banks in emerging market. Another is that more enterprise (low μ) and diverse or heterogeneous (high σ) societies has lower entry barrier of foreign banks during unfavorable credit market conditions. Namely, in enterprise and heterogeneous society, foreign banks are likely to extend their market shares during recession periods in emerging markets, not during prosperous one. Our theoretical findings also provide an explanation for the empirical observation from China market. Our model will have two theoretical extensions in the future. One is that we assume the credit market conditions and national culture are correlative, not independent. Another is that we replace loss aversion with risk aversion and demonstrate whether our basic results hold. Empirically, our result may be difficult to demonstrate since there are few measures of culture at the national level. Even if data were available on national averages, without data on the within country variance, it will be difficult to detect the true relationship between market share of foreign banks and national culture. More precise data on attitudes toward loss aversion around the world is an important area of future research.