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Foreign Banks: Trends, Impact and Financial Stability

Author/Editor: Claessens, Stijn | Horen, Neeltje van
Authorized for Distribution: January 1, 2012
Electronic Access: Free Full Text (PDF file size is 1,458KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: This paper introduces a comprehensive database on bank ownership for 137 countries over 1995-2009, and reviews foreign bank behavior and impact. It documents substantial increases in foreign bank presence, with many more home and host countries. Current market shares of foreign banks average 20 percent in OECD countries and 50 percent elsewhere. Foreign banks have higher capital and more liquidity, but lower profitability than domestic banks do. Only in developing countries is foreign bank presence negatively related with domestic credit creation. During the global crisis foreign banks reduced credit more compared to domestic banks, except when they dominated the host banking systems.
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Series: Working Paper No. 12/10
Subject(s): Banking systems | Banks | Financial stability | Foreign investment | Globalization | International banking
Author's keyword(s): Foreign banks; foreign direct investment | cross-border banking | bilateral investment | financial globalization | financial sector development | financial stability | spillovers | financial crisis.
    Published:   January 1, 2012        
            Format:   Paper
    Stock No:   WPIEA2012010   Pages:   39
    Price:   US$18.00 (Academic Rate: US$18.00 )
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