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Foreign and Domestic Bank Participation in Emerging Markets: Lessons from Mexico and ArgentinaB. Gerard DagesFederal Reserve Banks - Federal Reserve Bank of New York Linda S. GoldbergFederal Reserve Bank of New York; National Bureau of Economic Research (NBER) Daniel KinneyFederal Reserve Banks - Federal Reserve Bank of New York Economic Policy Review, Vol. 6, No. 3, September 2000 Abstract: It is generally agreed that strong domestic financial systems play an important role in attaining overall economic development and stabilization. The role played by foreign banks in achieving this goal, however, is still controversial. This article brings new evidence to the debate over foreign participation by examining the lending patterns of domestic and foreign banks in Argentina and Mexico during the 1990s. The authors conclude that foreign banks in both countries typically have stronger and less volatile loan growth than their domestic counterparts. The corollary to this finding, however, is that bank health - not ownership per se - is the critical element in the growth, volatility, and cyclicality of bank credit. Still, diversity of ownership is found to contribute to greater credit stability in times of financial system turmoil and weakness.
Number of Pages in PDF File: 20 Keywords: bank, emerging markets, lending, Mexico, Argentina, ownership JEL Classification: F3, F34, G21, N20 Accepted Paper SeriesDate posted: March 7, 2006Suggested CitationContact Information
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