Strategic change for the banking industry under financial deregulation: implications from Taiwan evidence

Through progressive financial liberalisation, banks are now facing more competition than ever before. In response to the impact of deregulation, strategic changes have been initiated within the banking industry. This study concentrates on the impact caused by Taiwan's financial deregulation on banks' new operational environment and their top-management-team (TMT) members. This deregulation is responsible for banks' strategic change when under the control of technology innovation and market competition. The findings indicate that government regulation and law, product market and demand, industrial technology, and TMT characteristics are all significantly associated with banks' strategic change. Specifically, the results indicate that banking deregulation, the change in market competition and customer demand, the dispersion of TMT tenure, and the TMT industrial seniority are positively associated with banks' strategic change. On the contrary, banks' MIS improvement is negatively associated with banks' strategic change. This paper further finds that a TMT member who is in the 'deposits' or 'loans' profession will be in a hurry to respond to market competition, and thus mobilise in order to permit the bank's strategic changes.