All expenses incurred by a company in connection with – entering a previously unserved business segment for the first time, or – entering a foreign, unfamiliar domestic or foreign trading market. – For banks, the expenses for entering a new segment of the domestic or foreign financial market are disproportionately higher than for industrial companies, which essentially only make investments in plant and machinery. This is because financial service providers first have to build up a reputation (good name; place in public esteem) and a customer network, especially in foreign markets. To do this, they need to become acquainted with the relevant regulatory requirements (to become acquainted with the financial supervision system valid in this country) and to comply with them in their business operations. – See agglomeration effect, alliances, cross-border, foreign branch, behavioral branding, gigabank, name identity, one-bank delivery, representative office, reputational risk. – Cf. Deutsche Bundesbank Monthly Report, January 2005, p. 33 et seq.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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