The pitfalls of multinational banking. The case of Italian banks in Egypt before WWII

The activity of Italian banks in Egypt in the first half of the 20th century represents an almost unexplored field of investigation in economic and banking historiography. This article is the first attempt to innovate the Italian banking literature in this area, providing evidence from a country strategically located in the Middle Eastern geopolitical framework. At the same time and more generally, it contributes to the multinational banking literature on the characteristics and criticalities of banks belonging to multinational groups, which are subject to a ‘liability of foreignness’ due to political, geographical and economic differences between the home country and the host economy. The paper addresses the main drivers of success of Italian banks, which were able to occupy primary positions within the Egyptian banking sector despite their relatively modest capital size thanks to an aggressive policy focused on the cotton market. It then highlights the reasons for the subsequent problems these institutes faced, showing the difficulties of a latecomer and capital-poor country, such as Italy, in carrying out a catching-up process aimed at widening its influence over geographical areas considered strategic in terms of political and commercial penetration.