Faculty of Economics and Business Administration Publications Database

Migration and the Retail Banking Industry: An Examination of Immigrants´ Bank Nationality Choise in Germany

Gleisner, Fabian
Rauch, Christian
Volume: 16
Number: 5
Pages: 459 - 480
ISSN-Print: 1351-847X
Link External Source: Online Version
Year: 2010
Keywords: Retail banking; Bank globalization; Migration
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.