Merger as a Trigger for Cultural Change in the Retail Financial Services Sector

As providers of financial services aim to reduce costs and satisfy increasingly articulate customers, growth through acquisition or merger appears to provide them with the means to achieve these objectives. A significant aspect of merger is the legacy of cultural integration and the literature is replete with examples of mergers where cultural matters have been poorly managed. This paper argues that merging institutions may find that by matching cultural developments to the dynamics of the environment, significant competitive advantage can be gained. Far from creating dysfunctional turbulence, merger activity might instead provide the necessary trigger to stimulate cultural change.Financial service providers and other merging institutions are advised to extend their horizons beyond achieving, smooth integration to instilling a culture more in tune with the dynamics of the marketplace.     

Outflows–induced sudden stops

The term ‘sudden stop’ refers to a scenario in which an emerging market is suddenly cut off from international capital markets. Losing access to capital markets can be devastating, often resulting in a currency crisis and recession. However, some sudden stop episodes are driven not by global investors heading for the exits, but rather by locals increasing their international claims. The source of the problem determines the policy response. To better focus on sources rather than outcomes, sudden stops should be identified as a cessation of inflows (inflows‐induced) or a sudden surge in outflows (outflows‐induced).