{
  "title": "Foreign Banks in Poor Countries: Theory and Evidence",
  "publication": "IMF Working Papers, January 1, 2006",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/foreign-banks-in-poor-countries-theory-and-evidence-18772",
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  "summary": "We study how foreign bank penetration affects financial sector development in poor countries. A theoretical model shows that when foreign banks are better at monitoring highend customers than domestic banks, their entry benefits those customers but may hurt other customers and worsen welfare.",
  "sections": [
    {
      "heading": "Publication metadata",
      "content": "- Authors: Enrica Detragiache, Poonam Gupta, Thierry Tressel\n- Publication date: January 1, 2006\n- Series: Working Paper No. 2006/018\n- Issue: 018\n- Volume: 2006\n- Pages: 50\n- DOI: https://doi.org/10.5089/9781451862782.001\n- Stock No: WPIEA2006018\n- ISBN: 9781451862782\n- ISSN: 1018-5941"
    },
    {
      "heading": "Research question and scope",
      "content": "- Examines how foreign bank penetration affects financial sector development in poor countries.\n- Combines a theoretical model with empirical cross-sectional and panel tests.\n- Focus subjects: Bank credit; Banking; Commercial banks; Credit; Financial institutions; Financial markets; Financial sector development; Foreign banks; Money."
    },
    {
      "heading": "Theoretical findings",
      "content": "- Theoretical model assumptions and mechanism:\n  - When foreign banks are better at monitoring high-end customers than domestic banks, their entry benefits those high-end customers but may harm other customers.\n  - Foreign bank entry can worsen overall welfare under these conditions.\n- Model prediction:\n  - Credit to the private sector should be lower in countries with more foreign bank penetration."
    },
    {
      "heading": "Empirical findings",
      "content": "- Main empirical associations in poor countries:\n  - A stronger foreign bank presence is robustly associated with less credit to the private sector in both cross-sectional and panel tests.\n  - In countries with more foreign bank penetration, credit growth is slower.\n  - In countries with more foreign bank penetration, there is less access to credit.\n- Findings for advanced countries:\n  - No adverse effects of foreign bank presence are found in more advanced countries."
    },
    {
      "heading": "Keywords and topical terms (as provided)",
      "content": "- assets in the country; bank assets; bank assets in bank; bank consolidation; Bank credit; bank entry; bank presence; Commercial banks; cost efficiency; Credit; Financial development; Financial sector development; foreign bank; foreign banks; low-income countries; market share; mismanaged bank privatization; Sub-Saharan Africa; WP"
    },
    {
      "heading": "Key statistics and identifiers (verbatim)",
      "content": "- Pages: 50\n- DOI: https://doi.org/10.5089/9781451862782.001\n- Issue: 018\n- Series: Working Paper No. 2006/018\n- Stock No: WPIEA2006018\n- ISBN: 9781451862782\n- ISSN: 1018-5941\n\nIMF Working Paper — Foreign Banks in Poor Countries: Theory and Evidence (Working Paper No. 2006/018).\n\n---\n\n Content in this bundle\n\n- wp0618 — Change in Private Credit to GDP and Change in Foreign Bank Presence\n  - wp0618 — Change in Private Credit to GDP and Change in Foreign Bank Presence (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp0618 — Change in Private Credit to GDP and Change in Foreign Bank Presence (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/foreign-banks-in-poor-countries-theory-and-evidence-18772"
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    "Authors: Enrica Detragiache, Poonam Gupta, Thierry Tressel",
    "Published: January 1, 2006",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451862782.001",
    "Authors: Enrica Detragiache, Poonam Gupta, Thierry Tressel",
    "Publication date: January 1, 2006",
    "Series: Working Paper No. 2006/018",
    "Issue: 018",
    "Volume: 2006",
    "Pages: 50",
    "DOI: https://doi.org/10.5089/9781451862782.001",
    "Stock No: WPIEA2006018",
    "ISBN: 9781451862782",
    "ISSN: 1018-5941",
    "Examines how foreign bank penetration affects financial sector development in poor countries.",
    "Combines a theoretical model with empirical cross-sectional and panel tests.",
    "Focus subjects: Bank credit; Banking; Commercial banks; Credit; Financial institutions; Financial markets; Financial sector development; Foreign banks; Money.",
    "Theoretical model assumptions and mechanism:",
    "Model prediction:",
    "Main empirical associations in poor countries:",
    "Findings for advanced countries:",
    "assets in the country; bank assets; bank assets in bank; bank consolidation; Bank credit; bank entry; bank presence; Commercial banks; cost efficiency; Credit; Financial development; Financial sector development; foreign bank; foreign banks; low-income countries; market share; mismanaged bank privatization; Sub-Saharan Africa; WP",
    "Pages: 50",
    "DOI: https://doi.org/10.5089/9781451862782.001",
    "Issue: 018",
    "Series: Working Paper No. 2006/018",
    "Stock No: WPIEA2006018",
    "ISBN: 9781451862782",
    "ISSN: 1018-5941",
    "**_wp0618 — Change in Private Credit to GDP and Change in Foreign Bank Presence**"
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