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Does Foreign Bank Entry Contribute to Financial Depth?: Examining The Role of Income Thresholds

Author

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  • Sasidaran Gopalan

    (Institute for Emerging Market Studies, Hong Kong University of Science and Technology)

Abstract

This paper examines the relationship between foreign bank entry and financial depth for 57 emerging and developing economies (EMDEs) over 1995-2009. Using various measures of financial depth, the paper also explores the degree to which the relationship between foreign bank entry and financial sector deepening varies by different income thresholds of EMDEs. The empirical findings suggest that while foreign banks positively further financial depth, the marginal effects of foreign bank entry diminish over time with greater levels of economic development. That is, the impact of foreign bank entry tends to become smaller as the per-capita income of the country rises.

Suggested Citation

  • Sasidaran Gopalan, 2015. "Does Foreign Bank Entry Contribute to Financial Depth?: Examining The Role of Income Thresholds," HKUST IEMS Working Paper Series 2015-05, HKUST Institute for Emerging Market Studies, revised Feb 2015.
    • Handle: RePEc:hku:wpaper:201505
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    References listed on IDEAS

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    Cited by:

    1. Sasidaran Gopalan, 2015. "Financial Liberalization and Foreign Bank Entry in Emerging and Developing Economies: What Does the Literature Tell Us?," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 6(02), pages 1-25.
    2. Sasidaran Gopalan, 2015. "Foreign Banks in Emerging Markets: Advantage or Impediment?," HKUST IEMS Thought Leadership Brief Series 2015-04, HKUST Institute for Emerging Market Studies, revised Jan 2015.
    3. Khee Giap Tan & Sasidaran Gopalan & Phuong Anh Nguyen Le, 2017. "Financial Deepening and Economic Growth in Transition Economies of Southeast Asia: A Geweke Causality Analysis," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 20(03), pages 1-25, September.

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    More about this item

    Keywords

    foreign bank entry; financial depth; financial development; income thresholds;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G00 - Financial Economics - - General - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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