The US government dual banking regulation levels, transaction costs and HSBC's strategy in acquiring Marine Midland Banks, Inc., 1978-80

Qing Lu

Business History, 2010, vol. 52, issue 6, 955-977

Abstract: This paper undertakes a case study of HSBC acquiring Marine Midland Banks, Inc. (MMBI) in the US between 1978 and 1980, a historic incident that had a catalytic impact on the whole debate about foreign banking in the US and re-examination of the restrictions on the US banks' inter-state operations. This paper explores the impact of the US government's financial regulatory structure on HSBC's acquisition and how HSBC dealt with difficulties caused by the US government regulations. We find that the structure of the US government financial regulation caused political hazards which further influenced HSBC's contractual hazards and business transaction costs. We have established that the different attitudes of the federal and state regulatory authorities toward HSBC's acquisition were closely related to their interests, regulatory capability and resources. Our analysis also confirms that HSBC's commitment strategy did help it to earn the federal regulatory authorities' support and MMBI's cooperation, which facilitated the conversion of Marine Midland Bank (MMB), a principal subsidiary of MMBI, to the status of a national chartered bank and allowed HSBC to circumvent the NYBD's regulation.

Keywords: US financial regulatory structure; acquisition; transaction costs; HSBC (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/00076791.2010.511184 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:bushst:v:52:y:2010:i:6:p:955-977

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/FBSH20

DOI: 10.1080/00076791.2010.511184

Access Statistics for this article

Business History is currently edited by Professor John Wilson and Professor Steven Toms

More articles in Business History from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().