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The challenges foreign banks face in developing markets: an exploratory study

The challenges foreign banks face in developing markets: an exploratory study This study aims to explore the challenges faced by foreign banks in the Kingdom of Saudi Arabia (KSA). It is important to explore the challenges as extant literature provides limited guidelines about this issue.Design/methodology/approachA mixed-method approach was used by canvassing 71 questionnaires and 36 semi-structured interviews. The sample included senior managers of foreign bank branches working in the Saudi market by the end of 2019. The quantitative data were analyzed using the distribution fitting algorithmic approach, and it is supported by the qualitative data analyzed using the thematic analysis method.FindingsResults indicate that foreign banks encounter various challenges including government policies and regulations, the Saudi legal system, high “Saudization” ratio of the workforce, technological advances, high competition and overall economic change (oil price change). It seems that these challenges represent the KSA’s specific business environment.Originality/valueThis study will advance the extant literature on foreign bank entry with evidence from a unique context. This study could also help regulators, policymakers and bankers to better understand foreign banks’ entry into emerging and developing markets. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Qualitative Research in Financial Markets Emerald Publishing

The challenges foreign banks face in developing markets: an exploratory study

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1755-4179
eISSN
1755-4179
DOI
10.1108/qrfm-12-2021-0207
Publisher site
See Article on Publisher Site

Abstract

This study aims to explore the challenges faced by foreign banks in the Kingdom of Saudi Arabia (KSA). It is important to explore the challenges as extant literature provides limited guidelines about this issue.Design/methodology/approachA mixed-method approach was used by canvassing 71 questionnaires and 36 semi-structured interviews. The sample included senior managers of foreign bank branches working in the Saudi market by the end of 2019. The quantitative data were analyzed using the distribution fitting algorithmic approach, and it is supported by the qualitative data analyzed using the thematic analysis method.FindingsResults indicate that foreign banks encounter various challenges including government policies and regulations, the Saudi legal system, high “Saudization” ratio of the workforce, technological advances, high competition and overall economic change (oil price change). It seems that these challenges represent the KSA’s specific business environment.Originality/valueThis study will advance the extant literature on foreign bank entry with evidence from a unique context. This study could also help regulators, policymakers and bankers to better understand foreign banks’ entry into emerging and developing markets.

Journal

Qualitative Research in Financial Markets – Emerald Publishing

Published: May 15, 2023

Keywords: Kingdom of Saudi Arabia (KSA); Foreign banks; Challenges; Developing markets; Business environment; F20; F29; G15; G29

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