Where have Foreign Banks in Nigeria Gone? The Impact of Local Competitors on MNEs Strategic Choices and Outcomes

Privately-owned banks hold 94% of Nigeria's banking assets, the world's second largest share of local ownership. Theoretical explanations for the dominance of local firms related to liabilities-of-foreignness do not apply... [ view full abstract ]

Privately-owned banks hold 94% of Nigeria's banking assets, the world's second largest share of local ownership. Theoretical explanations for the dominance of local firms related to liabilities-of-foreignness do not apply to Nigeria banking industry; nor does the absence of pull factors to attract foreign banks to Nigeria. To explain this puzzle we have adopted an exploratory study design, including extensive interviews with local and foreign banks in Nigeria and also examine Nigeria in regional and global perspectives. This exploration suggests that the entrepreneurial spirit of local banks, combined with nationalistic pride, have formed formidable barrier to the entry of foreign banks. Nigeria government had played major role in this development, by instilling governance and ownership standards and market structure and competition that have spurred the development of these capabilities. We offer theoretical extensions to accommodate these features in the theory of the MNEs and outline implications for policy and firms.