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Foreign Banks; Trends, Impact and Financial Stability

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  • Neeltje van Horen
  • Stijn Claessens

Abstract

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.

Suggested Citation

  • Neeltje van Horen & Stijn Claessens, 2012. "Foreign Banks; Trends, Impact and Financial Stability," IMF Working Papers 12/10, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:12/10
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    References listed on IDEAS

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    More about this item

    Keywords

    Cross-border banking; Banking systems; Financial crisis; Financial stability; Financial sector development; Spillovers; International banking; Globalization; Foreign direct investment; Foreign banks; Foreign investment; bilateral investment; financial globalization; foreign bank; domestic banks; foreign ownership; host countries;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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