Lawrence G. Goldberg

Foreign bank activity in the United States: An analysis by country of origin

Abstract The presence of foreign banks in the United States has grown dramatically in recent years. In particular, Japanese bank activity has grown rapidly and has raised concern from domestic bankers who have felt competitive pressure. This paper assesses the extent of the foreign bank presence in the United States and indicates its distribution by country of origin. The paper develops a formal model of determinants of the value of foreign bank assets and the number of foreign bank offices in the United States based on the country of origin of the investing banks and tests the model using recently available data from the Federal Reserve System. The empirical results indicate that foreign investment in the U.S., foreign trade with the U.S., and the size of the banking sector in the foreign country are positively correlated with that countrys bank presence in the U.S. Less stable countries have greater foreign bank penetration, and geographic distance is somewhat positively correlated with bank presence.

The structure-performance relationship for European banking

Abstract The relationship between market structure and performance has been studied extensively for American banking. In contrast, little work has been done to investigate this relationship for European banking. Two explanations of a positive correlation between profitability and concentration have been advanced, the traditional structure-performance hypothesis (SCP) and the efficient-structure hypothesis. Previous empirical tests of the alternative hypotheses have yielded mixed results but the tests were not robust because they did not incorporate measures of efficiency directly in the model. This study applies a stochastic cost frontier as proposed by Aigner et al. (1977) to derive measures of X-inefficiency and scale-inefficiency, under the assumption that the errors are distributed half-normal. We incorporate these measures of inefficiencies directly into the tests as proposed by Berger and Hannan (1993). We do not find a positive and significant relationship between concentration and profitability for a sample of banks across 11 European countries over a four year period, 1988–1991. However, we do find evidence to support one of the two versions of the efficient-structure hypothesis for banks located in countries with low concentration of banks. Since little support is found for either of the SCP hypotheses, a simple policy of strict limitations on cross-border acquisitions and growth is not warranted.

Youth, adolescence, and maturity of banks: Credit availability to small business in an era of banking consolidation

This paper addresses the relationship between the aging process at new and relatively young banks and the tendency of banks to make loans to small businesses. Defining small business loans as CI and when only MBHC banks are considered, age disappears as a significant influence.

The determinants of US banking activity abroad

Abstract The banking industry provides an excellent example of the internationalization of world business and economic interdependencies across countries. Analysis of the past growth of international banking operations can also prove useful to banks interested in augmenting their current business or expanding their international coverage, and to banks who anticipated future competition in their markets from new or strengthened foreign competitors. This study provides the most comprehensive examination of the development of US bank branches in other countries is presented and tested in order to facilitate the understanding of the expansion of international banking.

Executive compensation and agency costs in Germany

Abstract With the growth of international mergers like DaimlerChrysler, interest in executive compensation practices abroad, particularly in Germany, has increased. Using unique data sources for Germany, we find that similar to US firms, German firms also have agency problems caused by the separation of ownership from control, with ownership dispersion leading to higher compensation. In addition, there is evidence that bank influence has a negative impact on compensation.

Depositor discipline and changing strategies for regulating thrift institutions

Abstract This paper examines the role of uninsured deposits as a source of thrift funding from 1984 to 1994, and tests whether uninsured depositors have adjusted their holdings at thrifts in response to market forces, such as indications of impending institutional failure. It also examines how the reactions have changed over time as new legislation has been implemented. The study finds that failed institutions exhibit declining proportions of uninsured deposits-to-total-deposits prior to failure and that failing institutions attract fewer deposits from uninsured depositors prior to failure than do solvent institutions. Though there are some differences between the periods, the empirical results indicate that uninsured deposits will be governed by market discipline and that reducing the insurance limits on deposits will increase market discipline on thrifts.

The Causes of U.S. Bank Expansion Overseas: The Case of Great Britain

IN RECENT YEARS there has been a rapid increase in the activity of American banks outside the borders of the United States. This growth of foreign business has been far greater than that of domestic business. For example, while total assets of all U.S. commercial banks grew from

Location choice of foreign banks in the United States

255.7 billion in 1960 to

De novo banks and lending to small businesses: An empirical analysis

1,486 billion in 1978, the total assets of overseas branches rose from

Economies of scale and scope in the securities industry

3.5 billion to