The entry and exit decisions of foreign banks in Hong Kong

Man K. Leung, Trevor Young and Michael K. Fung
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Man K. Leung: School of Accounting and Finance, Hong Kong Polytechnic University, Hong Kong, Postal: School of Accounting and Finance, Hong Kong Polytechnic University, Hong Kong
Trevor Young: Economics, School of Social Sciences, University of Manchester, Manchester, UK, Postal: Economics, School of Social Sciences, University of Manchester, Manchester, UK
Michael K. Fung: School of Accounting and Finance, Hong Kong Polytechnic University, Hong Kong, Postal: School of Accounting and Finance, Hong Kong Polytechnic University, Hong Kong

Managerial and Decision Economics, 2008, vol. 29, issue 6, 503-512

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.

Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:29:y:2008:i:6:p:503-512

DOI: 10.1002/mde.1414

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