An examination of the motivations for the foreign acquisitions of the local banks : a case study of the Egyptian banks

Abdel-Aziz, Heba-Allah Abdel-Aziz Mahmoud

September 2021

Thesis or dissertation

© 2021 Heba-Allah Abdel-Aziz Mahmoud Abdel-Aziz. All rights reserved. No part of this publication may be reproduced without the written permission of the copyright holder.

Opposite to the 1970s, 1980s, 1990s, where there were several foreign banks joint ventures and branches of foreign banks established; the initial years of 2000s, in particular, between 2005-2010, had witnessed of established a wave of foreign banks M&As in the country –Egypt-. Here is an example of a debatable thesis that tries to investigate the main drivers and factors behind the recent wave of foreign M&As within the country –Egypt-.
As a matter of fact, the literature review indicates that there are drivers and factors at each of the host-country, and the local-firm, as well as at the foreign-firm, itself, that motivated the foreign entrants to adopt M&As across the borders.
Because of this, this thesis adopted the recent view of the OLI-paradigm of John Dunning that has emerged recently in 2006. This recent development of the OLI- paradigm emphasises on the effective role of the host countries‟ institutional features as a whole in adopting international strategies more than considering the country‟s risk-level and its market state(as suggested in the old OLI-paradigm). This recent development considered to be a theoretical hypothesis that needs to be verified.
As illustrated in the recent development of OLI-paradigm: the current study adopted the Locational-advantage that reflecting the institutional theory, to refer to the host- country institutional features; Ownership-advantage that reflecting the Resource- Based view, to refer to resources and capabilities for each of the international-partner and local-partner, and implicitly Internationalisation-advantage that reflecting the transaction-costs-view, which could be handled effectively through the country‟s high quality institutional features. So, the thesis‟ theoretical triangulation is achieved.
To verify that, the thesis adopted a positivism paradigm that tended to the realism paradigm, as a research route. A case study and a purposive sample of 6 case studies are adopted. A pattern-matching is employed, in which the emerging factors from the literature are set in order to be verified through a number of theoretical propositions. So, the current study adopted mix research methods, quantitative and qualitative methods, in order to link the empirical data to the study‟s proposed theoretical propositions. Quantitative data was collected through distributing Likert Five-Scale questionnaire and qualitative data was obtained through carrying out semi-structured interviews with the representative‟ staff of the acquiring banks and secondary data was obtained from international and local reports. So primary data and secondary data are used in the current thesis, and this achieved another triangulation in the methodology and the coolecting data of the current study.
The quantitative data was analysed by using parametric tests(one-sample t-test) since the study sample size =33 and the study‟s questionnaires data meet the normal distribution requirements.
The study results show that with the new millennium, no longer the old view of OLI- paradigm could interpret the entry of FDI into other countries, and instead of that the recent development of OLI-paradigm is suggested. This refers to the important role of the host country‟s preparations of the institutional features in attracting FDI to the country. Since the host country‟s institutional features are considered the only able to exploit the Ownership-advantage of the international banks abroad and to take advantage of the local-partner‟s resources, otherwise, the international banks couldn‟t expolit their resources. Since the international banks are encouraging to move towards a specific country, which its institutional features were prepared well, which involves regulatory quality features, legal and infrastructure, social and transparency features. But, this only possible when the foreign entrant has Ownership-advantage that attracting the local actors to select it, particularly amongst the other international banks. As well, it is also possible only when the local -partner has distinctive resources that attracting the international-partner to select a specific local bank amongst the other local banks.
In view of that, Dunning‟s recent development view of OLI-paradigm is verified in explaining the existence of expansionary activities by international banks in the country –Egypt-. However, still this topic needs more investigation since the current study discovered that each of the home countries‟ regulations and cultural influences may have an effect, as an initial mechanism, on the international banks‟ going abroad.

Business School, The University of Hull
Bovis, Christopher
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