Foreign Bank Participation and Crises in Developing Countries

This paper describes the recent trends in foreign bank ownership in developing countries, summarizes the existing evidence on the causes and implications of foreign bank presence, and reexamines the link between banking crises and foreign bank participation. Using data on the share of banking sector assets held by foreign banks in over 100 developing countries during 1995-2002, the results show that countries that experienced a banking crisis tended to have higher levels of foreign bank participation than those that did not. Furthermore, panel regressions indicate that foreign participation increased as a result of crises rather than prior to them. However, post-crisis increases in foreign participation did not coincide with increased credit to the private sector, perhaps because in many cases foreign banks acquired distressed banks.

Bibliographic Details

Main Authors:	Cull, Robert, Martínez Pería, María Soledad
Language:	English
Published:	World Bank, Washington, DC 2007-02
Subjects:	ADMINISTRATIVE COSTS, ASSET HOLDINGS, AVERAGE VALUES, BANK ACCOUNTING, BANK ACQUISITIONS, BANK ASSETS, BANK FOR INTERNATIONAL SETTLEMENTS, BANK MERGERS, BANK OF GREECE, BANKING CRISES, BANKING CRISIS, BANKING SECTOR, BANKING SYSTEM, BANKING SYSTEMS, BUDGET DEFICIT, BUDGET DEFICITS, CAPITAL FLOWS, CENTRAL ASIAN, COMMERCIAL CODE, CREDIT MARKETS, CROSS-BORDER, CROSS-COUNTRY EVIDENCE, DEGREE OF COMPETITION, DEPOSIT INSURANCE, DISTRESSED BANKS, ECONOMIC GROWTH, ECONOMIES OF SCALE, EFFICIENCY GAINS, EFFICIENCY IMPROVEMENTS, EMERGING MARKETS, EMPIRICAL ANALYSIS, EMPLOYMENT, ESTATE, EXECUTIVE DIRECTORS, FINANCIAL FIRMS, FINANCIAL INTEGRATION, FINANCIAL LIBERALIZATION, FINANCIAL SECTOR, FINANCIAL SERVICES, FINANCIAL SYSTEMS, FOREIGN ASSET, FOREIGN ASSETS, FOREIGN BANK, FOREIGN BANKS, FOREIGN COMPETITION, FOREIGN DIRECT INVESTMENT, FOREIGN DIRECT INVESTMENTS, FOREIGN ENTRY, FOREIGN OWNERSHIP, FOREIGN PARTICIPATION, GOVERNMENT INTERFERENCE, GOVERNMENT OWNERSHIP, GOVERNMENT REGULATION, HOST COUNTRIES, HOST COUNTRY, HOST DEVELOPING COUNTRIES, HOST ECONOMIES, INFLATION, INSTITUTIONAL DIFFERENCES, INSTITUTIONAL ENVIRONMENT, INTEREST INCOME, INTEREST RATES, INTERNATIONAL BANKS, LATIN AMERICAN, LAWS, LIMITED, LIQUIDITY, LOCAL MARKET, MARKET SEGMENTS, MARKET SIZE, MIDDLE EAST, NATIONAL BANK, NORTH AFRICA, OPERATING COSTS, OPERATING EXPENSES, OVERHEAD COSTS, PRIVATE BANKS, PRIVATE SECTOR, PRIVATE SECTOR DEVELOPMENT, PRIVATIZATION, PRIVATIZATION OF STATE, PROFITABILITY, PROPERTY RIGHTS, PROTECTION OF PRIVATE, PROTECTION OF PROPERTY, REGULATORY RESTRICTIONS, SHAREHOLDING, SMALL BUSINESSES, SMALL COMPANIES, SMALL FIRMS, SUB-SAHARAN AFRICA, SUBSIDIARIES, TRINIDAD AND TOBAGO, VOLATILITY,
Online Access:	http://documents.worldbank.org/curated/en/2007/02/7361403/foreign-bank-participation-crises-developing-countries https://hdl.handle.net/10986/7133
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