Does Foreign Bank Penetration Reduce Access to Credit in Developing Countries? Evidence from Asking Borrowers

By George R. G. Clarke, Robert J. Cull, María Soledad Martínez Pería. 2001

255 citations recorded by the source corpus.

Existing evidence on the effect of foreign bank penetration on lending to small and medium-size enterprises is ambiguous. Case studies of developing countries show that foreign banks lend less to such firms than domestic banks do. But cross-country studies find that foreign bank entry fosters competition and reduces interest rates, benefits that should extend to all firms. The authors use data from a large cross-country survey of enterprises to investigate this issue. Their results suggest that foreign bank penetration improves financing conditions (both the quantities of financing and the terms) for enterprises of all sizes, although it seems to benefit larger firms more.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/dc1cc2209e473cc5180f8c00e9131d01bb1d02b8

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Citations in the corpus

Financial Development, Growth, and Poverty : How Close are the Links? (2004, background): “…World Bank conference in Washington DC in April 2003, see http://www.worldbank.org/research/interest/confs/bank_concentration.htm. firms report easier access to finance in systems with larger foreign bank penetration (as is shown by Clarke et al. 2001, using the 400-firm database mentioned above).”
Measuring firms' access to finance (2006, methodology): “Using data from surveys from developing and transition economies, Clarke et al. (2001)”
Denying Foreign Bank Entry: Implications For Bank Interest Margins (2003, background): “Some researchers focus on the degree of foreign bank ownership ( Clarke, Cull, and Martinez Peria, 2001 ).”
What Determines the Composition of Banks' Loan Portfolios? Evidence from Transition Countries (2010, unknown): “Using data from a large cross-country survey of enterprises – including transition countries – Clarke et al (2001) find that foreign bank entry improves financing conditions for enterprises of all sizes, although larger firms benefit more.”
The Dynamic Adjustment Towards Target Capital Structures of Firms in Transition Economies (2006, background): “Using data from a large cross-country survey of enterprises – including transition countries – Clarke et al. (2001) show that foreign-owned enterprises rate access to long-term loans as less severe constraints than domestic enterprises.”