activity developed by the foreign firm in the host market. If the business model implies a duplication of costs, scale efficiencies will be difficult to attain. This is why some authors (for example, Casson (1990)) argue that a model based on subsidiaries with a retail focus is unlikely to benefit from large gains in efficiency, while a branch model would if directed to wholesale or investment banking markets. Second, the degree of internationalization is also relevant since banks with a large and geographically diversified customer base will be able to reduce transaction costs (Ursacki and Vertinsky (1992)). Thirdly, the use of their own distribution channels may imply large gains in efficiency, particularly in developing countries where the supply of certain banking services is generally poorer or sometimes nonexistent. In this case, subsidiaries oriented towards retail banking can certainly profit from product efficiencies. This is even more the case if foreign banks share the same culture and language with the host country since practically no change will be required in the products offered.