Research Article

Journal of International Financial Markets,
Institutions and Money 11 (2001) 53 – 63 www.elsevier.com/locate/econbase Foreign bank penetration of newly opened markets in the Nordic countries
Lars Engwall a,1, Rolf Marquardt b,2, Torben Pedersen c,3,
Adrian E. Tschoegl d,*
Department of Business Studies, Uppsala Uni6ersity, S -751 20 Uppsala, Sweden b Swedish Bankers Association, PO Box 7603, S -103 94 Stockholm, Sweden c Department of International Economics and Management, Copenhagen Business School,
Howitzs6ej 60, DK -1366 Copenhagen, Denmark d Department of Management SHDH 2000, The Wharton School, Uni6ersity of Pennsyl6ania,
Philadelphia, PA 19104 -6370, USA a Received 12 March 1999; accepted 1 January 2000

Abstract
The opening to foreign banks in the Nordic countries provides us with an opportunity to study the evolution of the foreign bank sector in situations where the sector had a definite start date. Despite low survival rates for individual foreign banks, on balance the foreign bank sector 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 the foreign banks bought entry by accepting worse lending risks. © 2001 Elsevier Science B.V. All rights reserved. JEL classification: F2; G2; N2
Keywords: Foreign banks; Nordic countries; Market share

* Corresponding author. Tel.: + 1 215 898 0619; fax: + 1 215 898 0401.
E -mail addresses: [e-mail] (L. Engwall), [e-mail] (R. Marquardt), [e-mail] (T. Pedersen), [e-mail] (A.E. Tschoegl).
1
Tel.: + 46-18-4711381; fax: + 46-18-4716810.
2
Tel.: + 46-8-4534448;

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