[Conference Object] Factors affecting bank selection in export financing: The case of Turkey

Abstract

This study investigates the factors that are effective in the selection of the banks with which the exporting firms choose to work in financing their operations. Choosing a bank is of utmost importance for firms since the chosen bank can, beyond facilitating the financial transactions, become a collaborative partner, influencing the timeliness, security, and reliability of cross-border exchanges. So, the choice of a bank can significantly impact the success of export finance transactions. This study investigates the factors exporters consider when choosing a bank for export financing. Based on the conceptual frameworks in the literature and interviews with the practitioners, a scale has been developed encompassing thirty-two variables that consistently emerge in various studies as crucial criteria for bank selection. To collect primary data and determine the key factors influencing exporters' bank selection in Turkey, a structured questionnaire was designed based on a five-point Likert scale to measure participants' levels of agreement concerning variables. A total of one hundred thirty responses were collected from Turkish and non-Turkish exporters in Turkey. The Statistical Package for Social Science (SPSS) and Microsoft Excel were used as the statistical tools for data analysis. An exploratory factor analysis was conducted using the principal component analysis (PCA) technique with Varimax rotation. The analysis resulted in the identification of five distinct factors: the first factor, "Alternative Products and Services," which comprises seven variables, the second factor, "Information and High-Quality Services," composed of four essential variables, the third factor, "Bank Institution Type" encompassing two key variables, the fourth-factor "Marketing and Customer Loyalty," consisting of three variables and the fifth factor "Bank Reputation," formed of two variables. The first and the second factors turned out to be the most important factors among others, as indicated by the highest average value. Bank reputation and marketing, and Customer Loyalty factors are in the next positions, respectively. Whether a bank is a conventional or participation bank is found to have the least importance. The study contributes to the literature in three aspects. First of all, it provides a new scale to measure the bank preferences of exporting firms which is a rather less studied area. Secondly, it contributes to the literature on customer behavior in the finance sector using sample data from institutional firms rather than individuals. Thirdly, the study has important ramifications for banks since it provides insights about which factors to focus on when approaching institutional clients that engage in exporting business.