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Financial Crises and the Presence of Foreign Banks

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  • Adrian E. Tschoegl

Abstract

The paper distinguishes between the classic or traditional foreign banks with their emphasis on corporate and wholesale banking, and the innovators responding to transition, deregulation or crisis in emerging markets. The innovators come in three varieties—bettors, prospectors and restructurers—with their role depending on their type. The paper argues, on the basis of 12 short national or regional case studies, that foreign banks have had little effect in evitting crisis, in great part because generally they were not present in any scale before the crisis. In the recovery phase foreign banks can act as rehabilitators of weak or failed banks, and can help ward off future crises by taking banks out of government or family ownership. The paper’s most controversial argument is that to the degree that reform succeeds, the conditions that attracted the foreign banks may disappear and the domestic banks are able to grow more rapidly. In subsequent decades many of the foreigner owners are likely to sell their subsidiaries to local banks and investors. Thus in succeeding decades, the ratio of assets in foreign- owned banks to total banking system assets should decline, even in the absence of government policies that aim for that result.

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File URL: http://128.118.178.162/eps/if/papers/0405/0405016.pdf
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Bibliographic Info

Paper provided by EconWPA in its series International Finance with number 0405016.

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Length: 73 pages
Date of creation: 10 May 2004
Date of revision:
Handle: RePEc:wpa:wuwpif:0405016

Note: Type of Document - pdf; pages: 73
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Web page: http://128.118.178.162

Related research

Keywords: Argentina; Bulgaria; Czech Republic; Hungary; Indonesia; Jamaica; Malaysia; Mexico; Norway; Pacific Islands; Tanzania; Thailand; emerging markets;

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References

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Citations

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Cited by:
  1. Rasyad A. Parinduri & Yohanes E. Riyanto, 2007. "The effect of Strategic Sale of Banks: Evidence from Indonesia," SCAPE Policy Research Working Paper Series 0709, National University of Singapore, Department of Economics, SCAPE.
  2. Aysan, Ahmet Faruk & Ceyhan, Sanli Pinar, 2006. "Globalization of Turkey’s Banking Sector: the Determinants of Foreign Bank Penetration in Turkey," MPRA Paper 5489, University Library of Munich, Germany.
  3. Aysan, Ahmet Faruk & Ceyhan, Sanli Pinar, 2008. "Structural Change and the Efficiency of Banking In Turkey: Does Ownership Matter?," MPRA Paper 17849, University Library of Munich, Germany.
  4. Ngoc-Anh Vo Thi & Dev Vencappa, 2008. "Does the Entry Mode of Foreign Banks Matter for Bank Efficiency? Evidence from the Czech Republic,Hungary, and Poland," William Davidson Institute Working Papers Series wp925, William Davidson Institute at the University of Michigan.
  5. Aneta Hryckiewicz & Oskar Kowalewski, 2010. "Why do Foreign Banks Withdraw from other Countries? A Panel Data Analysis," CESifo Working Paper Series 3006, CESifo Group Munich.
  6. Ricardo Correa, 2009. "Cross-Border Bank Acquisitions: Is there a Performance Effect?," Journal of Financial Services Research, Springer, vol. 36(2), pages 169-197, December.
  7. Cull, Robert & Martinez Peria, Maria Soledad, 2007. "Foreign bank participation and crises in developing countries," Policy Research Working Paper Series 4128, The World Bank.
  8. Farouk Soussa & Tracy Wheeler, 2006. "Do announcements of bank acquisitions in emerging markets create value?," Bank of England working papers 315, Bank of England.
  9. Tschoegl, Adrian, 2006. "Foreign ownership in Mexican Banking: A Self- Correcting Phenomenon," MPRA Paper 586, University Library of Munich, Germany.
  10. Ahmet Faruk Aysan & S. P. Ceyhan, 2006. "Globalization of Turkey's Banking Sector: The Determinants of Foreign Banking Penetration in Turkey," Working Papers 2006/20, Bogazici University, Department of Economics.

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