Does Knowledge about Foreign Markets Affect the Internationalization of Commercial Banks? : A case study on Ghanaian Indigenous Banks

Abstract

There has been a significant amount of literature written on the barriers to the internationalization of firms. Specifically, a greater fraction has focused on SMEs and non-.financial services while the banking sector, perceived as the heart of a healthy economy tends to be less favored. Although a few writings have been carried out in this area, their focus has mainly been on bank size as determinant of their geographic diversification. Contrary to the conventional literature, this paper uniquely aimed at examining the relationship between the management’s and the CEOs’ knowledge about foreign markets and the banks’ ability to diversify geographically, with focus on Ghanaian indigenous banks. With the objective of exploring how knowledge insufficiency about foreign markets hinders banks capability of internationalizing, the paper adopts a hybrid data collection method which is the combination of questionnaire, interviews and data from the websites of the various banks. Using the R-statistical software, a logistic regression analysis was used to analyze the data. The findings indicate that knowledge about foreign market plays cardinal role in firms’ ability to diversify geographically; however, there seem to be other variables that tended to be more crucial than knowledge about foreign market, an indication of further researching into these variables. The significance test showed no difference in the hypothetical claim.