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Location Decisions of Foreign Banks and Institutional Competitive Advantage - page 32 / 33

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dInstHost

0.560 **

0.393

0.526 **

0.246

[0.026]

[0.111]

[0.021]

[0.328]

Wald chi2

168.53

157.18

171.49

301.08

No. Obs.

8,838

8,838

8,838

8,838

Table 3 - First-differences test of institutional competitive advantage in foreign banking

The dependent variable equals all new investment from source country j in host country i between 1996 and 2006. dInstCompAdv is the change in the institutional competitive advantage variable between 1995 and 2005, which is defined as (|(Inst_source- Inst_host)|/( |(Inst_source-Inst_host)|/N)), see main text for explanation. Institutional quality is calculated as the simple average of six governance indicators as measured by Kaufmann, Kraay and Mastruzzi (2005). dInstHost is the change in the quality of institutions in the host country. dInstDif is change in the absolute difference between quality of institutions of source and host countries. dEntryres is the change in entry restrictions, with entry restrictions measured by a dummy which is 1 if foreign bank entry is restricted. dTrade is the change in the log of (1 plus) the sum of export and import between host and source country. dGDPsource and dGDPcapsource are the changes in the log of respectively GDP and GDP per capita in the source country. A Poisson regression model is applied. Regression coefficients reflect elasticities for the explanatory variables measured in logarithms and semi-elasticities otherwise. All regressions include a constant. Data are weighted by the inverse of the product of GDP of host and source country averaged over the sample period. The robust p-values appear in brackets and ***, ** and * correspond to one, five and ten percent level of significance respectively.

dEntryres

-0.389 *** [0.001]

-0.329 *** [0.006]

-0.381 *** [0.001]

dTrade

0.063 *** [0.000] -1.108 *** [0.000]

0.068 *** [0.000] -1.085 *** [0.000]

0.064 *** [0.000] -1.105 *** [0.000]

dGDPsource

dGDPcapsource

0.369 [0.254]

0.337 [0.284]

0.367 [0.255]

-1.035 ***

-0.158

[0.000]

[0.750]

dInstCompAdv

dInstDif

dInstCompAdv*M&A

dInstCompAdv*Green

  • -

    2.835 ***

[0.000]

  • -

    2.298 ***

[0.000]

  • -

    0.362 ***

    • [0.004

      ]

    • 0.050

      ***

    • [0.002

      ]

      • -

        0.917 ***

[0.000] 0.352 [0.263]

(1)

(2)

(3)

(4)

-1.200 *** [0.000]

-1.066 * [0.061]

-0.387 *** [0.000]

31

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