Foreign Banks in Poor Countries: Theory and Evidence
By E. Detragiache, T. Tressel, Poonam Gupta. Social Science Research Network, 2008
626 citations recorded by the source corpus.
We study how foreign bank penetration affects financial sector development in poor countries. A theoretical model shows that when domestic banks are better than foreign banks at monitoring soft information customers, foreign bank entry may hurt these customers and worsen welfare. The model also predicts that credit to the private sector should be lower in countries with more foreign bank penetration, and that foreign banks should have a less risky loan portfolio. In the empirical section, we test these predictions for a sample of lower income countries and find support for the theoretical model.
Subfields: Accounting, Finance
View Paper: https://www.semanticscholar.org/paper/db5e9aa1f0e5125f4426a10533b5ef0b0749773a
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Accounting
- Neeltje van Horen
- Stijn Claessens
- Ralph De Haas
- A. Zazzaro
- A. Presbitero
- Gregory F. Udell
- Philipp Schnabl
- Thorsten Beck
In Finance
- Neeltje van Horen
- Stijn Claessens
- Ralph De Haas
- Thorsten Beck
- Gregory F. Udell
- Philipp Schnabl
- A. Zazzaro
- Eswar S. Prasad
Citations in the corpus
- Is Bank Income Diversification Beneficial? Evidence from an Emerging Economy (2013, neutral): “E-mail addresses: celine.meslier@unilim.fr (C. Meslier), ruth.tacneng@unilim.fr (R. Tacneng) and amine.tarazi@unilim.fr (A. Tarazi)”
- Foreign Banks: Trends, Impact and Financial Stability (2012, methodology): “Some show that foreign banks “cherry pick” borrowers (Detragiache, Gupta, and Tressel, 2008; Beck and Martinez Peria, 2007).”
- The International Transmission of Bank Liquidity Shocks: Evidence from an Emerging Market (2012, methodology): “Empirical work using cross-sectional data on lending, such as Berger, Klapper, and Udell (2001), Mian (2006), and Detragiache, Tressel, and Gupta (2008), or using panel data on foreign bank entry, such as Gormley (2010), nds that foreign-owned banks tend to nance larger rms and domestically owned…”
- Competition and Stability in Banking (2016, neutral): “Detragiache et al. (2008) find that foreign bank entry in poor countries may reduce private credit growth.”