Does foreign ownership contribute to sounder banks in emerging markets? the Latin American experience
Foreign bank entrants into emerging markets are usually thought to improve the condition and performance of acquired institutions, and more generally to enhance local financial stability. We use bank-specific data for a range of Latin American countries since the mid-1990s to address elements of this claim. Across the seven largest countries, we find that the financial strength ratings of local banks acquired by foreign entities generally show a slight improvement relative to their domestic counterparts. Our more in-depth case studies of Chile, Colombia, and Argentina do not indicate striking differences in health between larger foreign and domestic retail-oriented banks (although state banks are noticeably weaker). However, foreign banks often have higher average loan growth, higher average provisioning expense, and greater loss-absorption capacity. These results suggest that foreign ownership may provide important positive influences on the stability and development of emerging market banking systems.
|Date of creation:||2001|
|Date of revision:|
|Contact details of provider:|| Postal: 33 Liberty Street, New York, NY 10045-0001|
Web page: http://www.newyorkfed.org/
More information through EDIRC
|Order Information:|| Web: http://www.ny.frb.org/rmaghome/staff_rp/ Email: |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Linda S. Goldberg, 2001.
"When is U.S. bank lending to emerging markets volatile?,"
119, Federal Reserve Bank of New York.
- Linda S. Goldberg, 2002. "When Is U.S. Bank Lending to Emerging Markets Volatile?," NBER Chapters, in: Preventing Currency Crises in Emerging Markets, pages 171-196 National Bureau of Economic Research, Inc.
- Linda S. Goldberg, 2001. "When Is U.S. Bank Lending to Emerging Markets Volatile?," NBER Working Papers 8209, National Bureau of Economic Research, Inc.
- Barth, James R. & Caprio Jr, Gerard & Levine, Ross, 2001. "The regulation and supervision of banks around the world - a new database," Policy Research Working Paper Series 2588, The World Bank.
- Hancock, Diana & Wilcox, James A., 1998.
"The "credit crunch" and the availability of credit to small business,"
Journal of Banking & Finance,
Elsevier, vol. 22(6-8), pages 983-1014, August.
- Diana Hancock and James A. Wilcox., 1998. "The "Credit Crunch" and the Availability of Credit to Small Business," Research Program in Finance Working Papers RPF-282, University of California at Berkeley.
- Linda Goldberg & B. Gerard Dages & Daniel Kinney, 2000.
"Foreign and Domestic Bank Participation in Emerging Markets: Lessons from Mexico and Argentina,"
NBER Working Papers
7714, National Bureau of Economic Research, Inc.
- B. Gerard Dages & Linda S. Goldberg & Daniel Kinney, 2000. "Foreign and domestic bank participation in emerging markets: lessons from Mexico and Argentina," Economic Policy Review, Federal Reserve Bank of New York, issue Sep, pages 17-36.
- Joe Peek & Eric S. Rosengren, 2000.
"Implications of the globalization of the banking sector: the Latin American experience,"
New England Economic Review,
Federal Reserve Bank of Boston, issue Sep, pages 45-62.
- Joe Peek & Eric S. Rosengren, 2000. "Implications of the globalization of the banking sector: the Latin American experience," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 44(Jun), pages 145-185.
- William C. Gruben & Jahyeong Koo & Robert R. Moore, 1999.
"When does financial liberalization make banks risky? : an empirical examination of Argentina, Canada and Mexico,"
Center for Latin America Working Papers
0399, Federal Reserve Bank of Dallas.
- Gruben, William C. & Koo, Jahyeong & Moore, Robert R., 1999. "When does financial liberalization make banks risky? an empirical examination of Argentina, Canada and Mexico," Working Papers 9905, Federal Reserve Bank of Dallas.
- Barajas, Adolfo & Steiner, Roberto & Salazar, Natalia, 2000. "The impact of liberalization and foreign investment in Colombia's financial sector," Journal of Development Economics, Elsevier, vol. 63(1), pages 157-196, October.
When requesting a correction, please mention this item's handle: RePEc:fip:fednsr:137. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Amy Farber)
If references are entirely missing, you can add them using this form.