West side story: global impact, local dynamics in pricing behavior of large European banks
European Journal of Finance, cilt.31, sa.15, ss.1868-1890, 2025 (SSCI, Scopus)
- Yayın Türü: Makale / Tam Makale
- Cilt numarası: 31 Sayı: 15
- Basım Tarihi: 2025
- Doi Numarası: 10.1080/1351847x.2025.2573480
- Dergi Adı: European Journal of Finance
- Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI), Scopus, IBZ Online, ABI/INFORM, EconLit
- Sayfa Sayıları: ss.1868-1890
- Anahtar Kelimeler: Geographic diversification, internationalization, European banking, interest margin, G21
- Kırklareli Üniversitesi Adresli: Evet
Özet
This study provides both theoretical and empirical analyses of how foreign bank income influences domestic interest prices for large European banks. The findings reveal a negative relationship between foreign income and domestic interest prices, driven by increasing competitiveness in the domestic market through market power, adopting the ‘follow the customer’ strategy, and increasing profitability. Notably, income from the rest of Europe plays an important role in the negative relationship with the domestic interest price, while income from the rest of the world is insignificant. The study also identifies, from a business model perspective, foreign interest income as central to this inverse relationship. The impact of foreign income on domestic product pricing, along with the region and type of income from which it is derived, provides important insights for regulators, supervisors, and bank management. It also highlight the potential limitations of the expected benefits of geographic diversification, as well as the increased risks it may entail.