Publication: Foreign Bank Participation and Crises in Developing Countries
Date
2007-02
ISSN
Published
2007-02
Author(s)
Cull, Robert
Martínez Pería, María Soledad
Abstract
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.
Citation
“Cull, Robert; Martínez Pería, María Soledad. 2007. Foreign Bank Participation and Crises in Developing Countries. Policy Research Working Paper; No. 4128. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/cec5086c-1407-5b0f-8256-001f558cc1c1 License: CC BY 3.0 IGO.”
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