What Motivates Foreign Banks Entry In Low-income Sub-saharan Countries

This paper examines the motivations of foreign banks in low income sub-Saharan African countries. The main purpose of the paper is to understand what the foreign banks target are and what outcomes could follow as their presence in the host countries grows. The research used secondary data from thirteen low-income African countries. The researcher estimates the panel data using the time fixed effects model to investigate the relationship between possible motivations for foreign banks. The data covered a period of nine years from 2005-2013 since further years data was not available from possible sources. In the research foreign bank presence has been used as dependent variable and inflation, GDP growth, FDI net inflow, trade, and external debt are used as independent variables. The analysis result shows that inflation and GDP growth has negative impact on the entry of foreign banks. FDI inflow and trade are huge motivation in entering the market. The entry mainly targets giant companies operating in the host country. On the other hand, the foreign banks are not motivated in borrowing.

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