Foreign Banks: Trends, Impact and Financial Stability

IMF Working Papers, January 1, 2012

Source details

Introduces a comprehensive database on bank ownership for 137 countries over 1995-2009.
Coverage includes multiple home and host countries to document changes in foreign bank presence.

Documents substantial increases in foreign bank presence, with many more home and host countries.
Current market shares of foreign banks:
- 20 percent in OECD countries
- 50 percent elsewhere
Comparative bank characteristics:
- Foreign banks have higher capital.
- Foreign banks have more liquidity.
- Foreign banks have lower profitability than domestic banks.
Relationship with domestic credit:
- 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.

Subjects: Bank credit, Banking, Commercial banks, Credit, Emerging and frontier financial markets, Financial institutions, Financial markets, Financial sector development, Foreign banks, Money
Keywords: Asia and Pacific, bank, bank characteristic, bilateral investment, Central and Eastern Europe, Commercial banks, Credit, cross-border banking, domestic bank, Emerging and frontier financial markets, emerging market banks, financial crisis, financial globalization, financial sector development, financial stability, foreign bank, Foreign banks, foreign direct investment, Global, investment activity, lending, Middle East, parent bank, providing emerging market banks incentive, South Asia, spillovers, WP

Summary and metadata derived from the IMF Working Paper landing page for "Foreign Banks: Trends, Impact and Financial Stability".