Analyzing the Decision-making Process of Establishing Overseas Affiliates of Commercial Banks in Taiwan

Abstract

Through case analyses of major commercial banks' establishment of their overseas affiliates, the paper derives critical hypotheses regarding their decision-making process. Arranged by major steps in the decision-making process, these hypotheses are: (i) there are also political or governmental policy considerations in establishing overseas affiliates besides economic motives; (ii) major targeting sites are located at international financial centers where also resides principal clients of commercial banks in Taiwan; (iii) trade financing is the major scope of business, whereas involvement in operating international financial instrument are minimal; (iv) banks with more overseas experiences perform environmental analysis more comprehensive; (v) branch is the preferred type of organization for overseas affiliates; (vi) in addition to financial returns, non-economic benefits are estimated in the cost-benefit analysis. Based on rationality of the decision-making process and relativism of systems approach, the author formulates an improved framework of decision-making process to facilitate commercial banks in establishing overseas affiliates.