Use this URL to cite or link to this record in EThOS: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.553155
Title: The investment decision of banks in the City of London : a real option theory approach
Author: Gulamhussen, Mohamed Azzim
Awarding Body: University of Reading
Current Institution: University of Reading
Date of Award: 2001
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Abstract:
There is a gap in the existing empirical literature on the investment decision of banks in financial centres. While there are empirical tests with micro analytic data on the investment decisions of banks in the United States and Japan, this is not the case of London. This study empirically tests the factors affecting the investment decision of banks in the City of London through a unique set of interviews with senior managers in the industry and ~ls in the mentioned gap in the existing empirical literature. The study puts the existing applications of the theory of investment decisions of firms in foreign markets to banks into a logically consistent sequence and brings in other factors from real option theory. In particular, it integrates the existing applications within a profit- maximisation model of the behaviour of banks in financial centres. The hypotheses are derived through comparative static analysis. The empirical findings, in agreement with the profit maximisation theory, broadly conform to the existing empirical findings and suggest the existence of strong option effects in the investment decision of banks in the City of London. To date applications of real option theory have found options of a contractual nature derived from informal arrangements in joint ventures to have great importance in the context of the investment decisions of manufacturing enterprises. The empirical findings of this study suggest that options of a non-contractual nature have greater importance in the context of the investment decision of banks in foreign markets.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID: uk.bl.ethos.553155  DOI: Not available
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