Radical Institutional Change: Foreign Firms Strategic Responses to Regulatory Punctuations in Emerging Markets

Abstract

This paper offers theoretical and empirical insights about the strategies and characteristics of foreign banks operating in an emerging market, which suffered radical transformations in its business landscape during the 1990’s and the early 2000s. The results demonstrate foreign banks from countries with stronger commercial ties to the focal emerging market, a higher degree of internalization, and more aggressive lending practices (in the focal market) outperformed and or outlasted foreign banks with weaker commercial ties, lower degrees of internalization, and less aggressive lending practices.