Foreign Banks: Trends, Impact and Financial Stability

40 Pages Posted: 2 Feb 2012

See all articles by Stijn Claessens

Stijn Claessens

Bank for International Settlements (BIS)

Neeltje van Horen

affiliation not provided to SSRN

Multiple version iconThere are 3 versions of this paper

Date Written: January 2012

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.

Keywords: Foreign Banks, Foreign Direct Investment, Cross-border Banking, Bilateral Investment, Financial Globalization, Financial Sector Development, Financial Stability, Spillovers, Financial Crisis, Banking Systems, Foreign Investment, International Banking

JEL Classification: F21, F23, G21

Suggested Citation

Claessens, Stijn and Horen, Neeltje van, Foreign Banks: Trends, Impact and Financial Stability (January 2012). IMF Working Paper No. NO.12/10. Available at SSRN: https://ssrn.com/abstract=1997723

Stijn Claessens (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

Neeltje van Horen

affiliation not provided to SSRN

No Address Available

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