Cull, RobertMartinez Peria, Maria Soledad2012-03-192012-03-192010-08-01https://hdl.handle.net/10986/3882Foreign 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.CC BY 3.0 IGOACCESS TO CREDITACCESS TO FINANCEACCESS TO FINANCIAL SERVICESADBBALANCE SHEETSBANK ACTIVITYBANK BEHAVIORBANK BRANCHESBANK CLAIMSBANK COMPETITIONBANK FINANCINGBANK FOR INTERNATIONAL SETTLEMENTSBANK INTEREST MARGINSBANK LENDINGBANK MERGERSBANK OF KOREABANK OPERATIONSBANK ORIGINBANK POLICYBANK REGULATIONBANK SPREADSBANKING CRISISBANKING INDUSTRYBANKING MARKETBANKING MARKETSBANKING SECTORBANKING SECTOR EFFICIENCYBANKING SECTOR STABILITYBANKING SECTORSBANKING STABILITYBANKING SYSTEMBANKING SYSTEMSBARRIERS TO ENTRYBORROWERBORROWINGCOLLATERALCOMMERCIAL BANKCOMMERCIAL BANKSCONSOLIDATIONCORRUPTIONCOST REDUCTIONCREDIT LEVELSCREDIT REPORTINGCREDIT REPORTING AGENCYCREDIT REPORTING SYSTEMCREDITWORTHINESSCRISIS IN EMERGING MARKETSCROSS-COUNTRY EVIDENCECROSS-COUNTRY STUDIESCURRENCYCURRENCY CRISISDEBTDEPOSITSDEVELOPING COUNTRIESDEVELOPING ECONOMIESDEVELOPMENT BANKSDOMESTIC BANKDOMESTIC BANKINGDOMESTIC BANKING MARKETDOMESTIC BANKING MARKETSDOMESTIC BANKSDOMESTIC FIRMSDOMESTIC INVESTMENTECONOMIC GROWTHECONOMIC OPPORTUNITIESECONOMIC POLICYECONOMIES OF SCALEEMERGING ECONOMIESEMERGING MARKETEMERGING MARKET ECONOMIESEMERGING MARKET FINANCEEMERGING MARKETSENTRY BARRIERSFDIFEDERAL RESERVEFEDERAL RESERVE BANKFEDERAL RESERVE BANK OF BOSTONFEDERAL RESERVE BANK OF NEW YORKFINANCIAL COSTSFINANCIAL CRISESFINANCIAL CRISISFINANCIAL DEPTHFINANCIAL GLOBALIZATIONFINANCIAL HEALTHFINANCIAL INSTITUTIONSFINANCIAL INTEGRATIONFINANCIAL INTERMEDIATIONFINANCIAL LIBERALIZATIONFINANCIAL MARKETSFINANCIAL REGULATIONFINANCIAL SECTORFINANCIAL SECTOR DEVELOPMENTFINANCIAL SECTORSFINANCIAL SERVICEFINANCIAL SERVICE PROVIDERSFINANCIAL SERVICESFINANCIAL STABILITYFINANCIAL SYSTEMSFIRM PERFORMANCEFOREIGN BANKFOREIGN BANK ENTRYFOREIGN BANK OPERATIONSFOREIGN BANK PARTICIPATIONFOREIGN BANK PENETRATIONFOREIGN BANKING PRESENCEFOREIGN BANKSFOREIGN DIRECT INVESTMENTFOREIGN ENTRYFOREIGN INVESTMENTFOREIGN INVESTORSFOREIGN MARKETSFOREIGN OWNERSHIPFOREIGN PARTICIPATIONFOREIGN PENETRATIONGLOBAL ECONOMYGLOBALIZATIONGOVERNMENT BANKSGROWTH RATEGROWTH RATESHOME COUNTRIESHOME COUNTRYHOST COUNTRIESHOST COUNTRYINFORMATION ON BORROWERSINFORMATIONAL ASYMMETRYINTEREST INCOMEINTEREST RATESINTERNATIONAL BANKINTERNATIONAL DEVELOPMENTJUDICIAL EFFICIENCYLEGAL FRAMEWORKLEGISLATIONLENDERLENDING DECISIONSLENDING POLICIESLEVYLIABILITYLIQUIDITYLOANLOCAL BANKSLONG-TERM LENDINGLOW-INCOME COUNTRIESMANUFACTURING FIRMSMARKET CONCENTRATIONMARKET FINANCEMARKET STRUCTUREMULTINATIONALMULTINATIONAL BANKSMULTINATIONALSMUNICIPALITIESNEGATIVE SHOCKSNEW MARKETNEW MARKETSNON-PERFORMING LOANSOPAQUE SMALL BUSINESSESOPERATING COSTSOUTREACHOVERHEAD COSTSOWNERSHIP STRUCTUREPARTICULAR COUNTRIESPERSONNEL EXPENSESPORTFOLIOSPRIVATE CREDITPRIVATE SECTORPRIVATE SECTOR DEVELOPMENTPRIVATIZATIONPROFIT OPPORTUNITIESPROFITABILITYPROVISION OF CREDITREAL ESTATEREAL ESTATE LOANSREGULATORY RESTRICTIONSRESERVESRETURNRETURN ON ASSETSRULE OF LAWSHARE OF ASSETSSHARE OF BANK ASSETSSMALL BUSINESSESSMALL ENTERPRISESMALL ENTERPRISE FINANCESMALL FIRMSSMESSTOCK MARKETSSTRATEGIC INVESTORSSUBSIDIARIESTRANSITION COUNTRIESTRANSITION ECONOMIESVOLATILITYWORLD FINANCIAL MARKETSWorld Bank10.1596/1813-9450-5398