Adrian E. Tschoegl

The Decision to Establish a Foreign Bank Branch or Subsidiary: An Application of Binary Classification Procedures

This paper has two purposes. First, we model a key decision for international banks using data on the foreign direct investment (FDI) behavior of foreign banks in Japan and California. Second, we examine the utility of linear discriminant analysis and maximum likelihood logit analysis as statistical techniques for relating a qualitative dependent variable to a vector of independent variables.

Banks and the world’s major financial centers, 1970–1980

ZusammenfassungBanken und die wichtigsten Finanzzentren der Welt 1970–1980. — Analysiert wird die Verflechtung von internationalen Finanzzentren, indem die geographische Streuung von Zweigstellen der grö\ten Banken zwischen 1970 und 1980 nÄher untersucht wird. Es zeigt sich, da\ sich die gegenseitigen Beziehungen der Zentren im Laufe der Zeit verstÄrkten. Bei der statistischen Analyse der gegenseitigen Durchdringung der Zentren stellt sich heraus, da\ die AttraktivitÄt eines Zentrums für die Banken entscheidend von der wirtschaftlichen Grö\e der Zentren abhÄngt und davon, wieviele Banken dort ansÄssig sind, da\ aber die Distanz zwischen den Zentren von geringer Bedeutung zu sein scheint. Es gibt auch Anzeichen sowohl für ein konkurrierendes als auch für ein kooperatives Verhalten von Banken.RésuméBanques et les centres financiers mondiaux les plus importants, 1970–1980. — Les auteurs analysent les interrelations des centres financiers mondiaux en examinant la structure géographique des offices des plus grandes banques mondiales en 1970 et 1980. Ils trouvent que les interrelations entre les centres ont augmenté pendant cette période. De plus ils utilisent des techniques statistiques pour analyser les déterminants de l’interpénétration des centres. Ils trouvent que la force d’attraction d’un centre pour les banques est bien figurée par la dimension de l’économie qu’elle représente ou par le nombre des banques qui se trouvent là pendant que la distance entre des centres semble avoir peu d’effet. Il y a aussi l’évidence pour un comportement de rivalité et de coopération entre des banques.ResumenBancos y centros financieros más importantes, 1970–1980. — Analizamos la interdependencia entre los centros financieros del mundo observando la distributión geográfica de las oficinas de los bancos más importantes en 1970 y 1980. Encontramos que la interdependencia entre los centros ha aumentado en el período estudiado. Utilizando métodos estadísticos investigamos además las determinantes de la interrelación entre los centros. Concluímos que la atractividad de un centro para los bancos depende del tamaño de la economía en la que se encuentra o del nÚmero de bancos establecidos en él. La distancia entre los centros parece no influír mucho. También hay evidencia de un comportamiento competitivo o cooperativo por parte de los bancos.

Some Aspects of Japanese Corporate Finance

In this paper, we attempt to blend economic theory with an understanding of the historical context and regulation of Japanese financial markets, particularly during the 1950s and 1960s. The historical and regulatory context is critical since it represents the framework within which the economic forces operated. That is, we are interested in examining how a particular structure, characterized by controlled interest rates, segmentation of markets and functions, and limited entry, gave rise in understandable ways to distinctive corporate financial practices.

Financial Crises and the Presence of Foreign Banks

The paper distinguishes between the classic or traditional foreign banks with their emphasis on corporate and wholesale banking, and the innovators responding to transition, deregulation or crisis in emerging markets. The innovators come in three varieties—bettors, prospectors and restructurers—with their role depending on their type. The paper argues, on the basis of 12 short national or regional case studies, that foreign banks have had little effect in evitting crisis, in great part because generally they were not present in any scale before the crisis. In the recovery phase foreign banks can act as rehabilitators of weak or failed banks, and can help ward off future crises by taking banks out of government or family ownership. The paper’s most controversial argument is that to the degree that reform succeeds, the conditions that attracted the foreign banks may disappear and the domestic banks are able to grow more rapidly. In subsequent decades many of the foreigner owners are likely to sell their subsidiaries to local banks and investors. Thus in succeeding decades, the ratio of assets in foreign- owned banks to total banking system assets should decline, even in the absence of government policies that aim for that result.

Efficiency in the gold market — a note☆

Abstract This paper investigates the efficiency of the gold market with respect to the information contained in sequences of successive price changes. Tests for serial correlation and modelling the changes as first-order Markov processes indicate some short-term dependence. While there is no reason to believe outsiders can profit from knowledge of these relationships, insiders might, though this is not certain. In addition, the application of a market model to monthly returns for the period 1974–1977 results in the finding that golds ‘alpha’ and ‘beta’ were positive, but not significantly different from zero.

Banking on Gambling: Banks and Lottery-Linked Deposit Accounts

Deposit accounts that provide an interest return determined by a lottery have proved to be popular around the world. From the point of view of a bank, these products are especially successful among relatively low-income customers, or in markets in which many people are outside the banking system. Below, we describe numerous examples of such accounts, and analyze their economics.

Foreign bank penetration of newly opened markets in the Nordic countries

The opening to foreign banks in Denmark, Finland, Norway and Sweden provides us with an opportunity to study entry, survival and success in a situation where the entrants were subject to the liability of foreignness but not the liability of newness. We find that despite low survival rates, on balance the entrants gained market share (in terms of the assets of the banking system) over time. Our results for the role of time, links to the home market and problems facing domestic competitors were strongly in accordance with expectations in the cases of Denmark, mixed or indeterminate for Finland and Norway, and strongly opposite in the case of Sweden. Lastly, our results are broadly consistent with the Stiglitz-Weiss argument that new entrants, in this case foreign banks, buy entry by accepting worse lending risks.

Banks and the world’s major banking centers, 2000

We update earlier articles on the determinants of interpenetration of financial centers by banks and analyze the substantial changes that have occurred between 1990 and 2000. First, the number of banks and the number of offices in other centers has fallen by over 20 percent since 1990. Second, aggregate interconnectedness has held steady between 1990 and 2000, though there is an increasing asymmetry. Third, Tokyo has lost rank as a center, while Hong Kong and Singapore have continued to gain importance. Fourth, Frankfurt, rather than gaining importance with the advent of the euro, has apparently lost importance. Lastly, some explicit or implicit agreements between banks from different countries not to compete in each others markets have continued to wane, though intra-European interpenetration remains relatively low. JEL no. F30, G15, G21

The Market Value of Rarity

Abstract Most theories of demand assume that consumers value the characteristics of products but are unconcerned with how many other consumers also consume the product. However, several theories of demand argue that consumers can value the exclusivity of possessing a rare object. We test this implication on a particular collectible, rare coins. Our paper examines the case of coins of a given type and identical quality that have mintages in different quantities. This allows us to exclude the common case in which rarity (or price itself) is an indicator of quality. For our sample, rarer coins command higher prices; rarity in the form of original mintage more strongly influences the market price than does collectibility as represented by the rarest coins of each mint mark or year. We also point out that here may be other goods such as automobiles, for which rarity may influence market demand.

Concentration Among International Banks A Note

The note presents evidence that concentration in international banking decreased over the period 1969-1979, and will continue to decrease. The data consists of static and dynamic measures applied to asset data for the worlds 100 largest banks, and top 20 medium-term Euroloan syndicators (1977–1979).