Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

Foreign bank participation has increased steadily across developing countries since the mid-1990s. This paper documents this trend and surveys the existing literature to explore the drivers and consequences of this phenomenon, paying particular attention to the differences observed across regions both in the degree of foreign bank participation and in the impact of this process. Local profit opportunities, the absence of barriers to entry, and the presence of mechanisms to mitigate information problems have been the main factors driving foreign bank entry across developing countries. In general, foreign bank participation has been shown to exert a positive influence on banking sector efficiency and competition. The weight of the evidence suggests that foreign bank presence does not endanger, but rather enhances banking sector stability. And although some case studies suggest that foreign bank entry limits access to finance, many cross-country studies offer evidence to the contrary.

Access to Finance --- Bank branches --- Bank for international settlements --- Banking sector --- Banking stability --- Banking system --- Banks & Banking Reform --- Debt --- Debt Markets --- Emerging Markets --- Finance and Financial Sector Development --- Financial integration --- Financial regulation --- Financial services --- Foreign banks --- Foreign Direct Investment --- Foreign entry --- Interest income --- Interest rates --- International Economics and Trade --- Legal framework --- Legislation --- Operating costs --- Overhead costs --- Private Sector Development --- Profitability --- Return on assets --- Subsidiaries