UBC Theses and Dissertations
International banking activities of Canadian and American banks : experience and prospects Bruce, Barry Douglas
The objective of this study was to explore the historical expansion of the international operations of the Canadian chartered banks; to compare and contrast the exhibited growth pattern with that of the major commercial banks of the United States; to draw implications for the future pattern of world banking; and to see the role of the Canadian banks in that pattern. The analysis was limited largely to the post-World War II era and was conducted primarily in terms of the operating forms employed in other countries by the banks. The foreign-based vehicles described were the representative office, agency, branch, wholly-owned subsidiary, affiliate and multinational joint venture. The approach was essentially qualitative in character with a number of hypotheses introduced to explain the findings but with no effort made to statistically test these hypotheses. Specifically, hypotheses were tendered to account for the exhibited increasing internationalization of the banks; to explain why they go abroad to set up foreign "offices"; to explain why they might choose a particular country or area; and to account for the selection of a particular operating form for this location. The study relied upon several principal sources of information in order to develop the hypotheses offered. Standard governmental publications and the annual reports of the selected Canadian and U.S. banks were significant data sources and a number of articles from various periodicals were found to be especially relevant. Vital information was acquired by correspondence with the selected banks of each country and through personal interviews with executives in the International Divisions of these institutions. To facilitate the investigation of overseas involvement, and to enable more effective comparisons and contrasts to be developed the world was divided into seven geographic regions. It was found that the banks of both countries have experienced increasing internationalization of activity during the past 25 years with the U.S. banks enjoying more extensive "office" representation in other countries. The findings indicated that the greater number of U.S. customers abroad, measured in terms of U.S. foreign direct investment abroad, may be the most important contributory factor. The chartered banks, on the other hand, generally appeared to be motivated more by the volume and direction of Canadian external trade and the value and sources of foreign investment in Canada as the prime forces behind their increasingly "international flavour" and movement into certain countries or areas. The study indicated that bank policy was a pervasive, universal force influencing the exhibited extent of internationalization of the number and variety of "offices" abroad of the individual banks, particularly in terms of the variety of vehicles employed and the locations selected as a base of operations. On the other hand, it was indicated that restrictive Canadian banking legislation may be a force limiting the banking activity of the chartered banks in certain areas while New York and California state legislation has facilitated the overseas expansion of the U.S. banks. The respondents were asked to name the principal persistent problems which their banks experienced during the conduct of their international operations. On the basis of these perceived difficulties and from the findings of the study to that stage implications were drawn concerning the future pattern of international banking particularly as it pertained to the chartered banks. The findings indicated that the trend toward increasing internationalization could be expected to continue for the banks of both countries with the U.S. institutions continuing to be more intensively represented on a wider scale geographically. The range of operating vehicles is not expected to increase but it appears that the affiliate and multinational joint venture may become relatively more important. Significant changes in international operating methods and management techniques are expected to be forthcoming from the increased application of computer technology, especially through the centralization of information. On the other hand, the future can be expected to bring greater decentralization of authority through expanded regional organization.
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