Migration and the Retail Banking Industry - An Examination of Immigrants' Bank Nationality Choice in Germany

Gleisner, Fabian, Hackethal, Andreas and Rauch, Christian (2010) Migration and the Retail Banking Industry - An Examination of Immigrants' Bank Nationality Choice in Germany. The European Journal of Finance, 16 (5). pp. 459-480.

Abstract

We study the choice of bank nationality by foreign-born retail banking customers in the context of bank globalization. We argue theoretically that banks enter foreign markets to follow their non-corporate customers and thereby are able to exploit competitive advantages over domestic banks. Using detailed survey data on more than 1000 Turkish immigrants in Germany, we find that product differentiation explains the choice of a home nation bank and that ethnic origin in itself provides the strongest comparative advantage for foreign banks. We find evidence for a persistent ‘home-bias’ of customers with an immigration background even with increasing integration into the host country's culture. This result may be surprising given that a systematic difference in the choice of bank nationality should not be observable with more integrated immigrants. Our results contribute to the existing economic research on multinational bank expansion by providing insights into bank globalization as an accompaniment to labor market internationalization.

Item Type: Article
Keywords: retail banking; bank globalization; migration; finance
Subject(s): Finance
Date Deposited: 07 Oct 2015 13:57
Last Modified: 27 Feb 2017 10:07
Funders: not applicable
URI: http://eureka.sbs.ox.ac.uk/id/eprint/5539

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