The Effect Of Foreign Bank Entry On Banking In Developing Countries

With the development of the globalization of economics and finance in 1980s,foreign bank entry has become an inevitable trend. In the recent over ten years, foreignbanks have been entering in developing countries in a great deal due to the easing up ofbanking supervision and regulation in these countries. And the influence of the foreignbank entry on the domestic banking industry in developing countries has been paidmore and more attention by economist and policy makers in developing countries.First this paper defines foreign bank entry and analyzes the reasons and survey offoreign bank entry in developing countries. Chapter 2 summarizes the effect of foreignbank entry in developing countries from four aspects: survey, different circs, time,andresearch achievements of this issue. This paper emphasizes on the effect of foreignbank entry on banking efficiency and stabilization in developing countries. Using thestudy achievements above for reference, chapter 5 analyzes the actuality, effect andcountermeasure of foreign bank entry in China. Finally this paper summarizes thecontent and primary conclusions and points out the way of further study.A lot of studies have done on the effect of foreign bank entry in developed countries,emerging countries and transition countries. This paper studies the influence of foreignbank entry on efficiency and stabilization of domestic banking in developing countries.The innovation of this paper is that this paper using demonstration studies the effect offoreign bank entry on domestic banking efficiency. This paper using the panel data of50 developing countries studies the influence of foreign bank entry on bakingefficiency (growth rate of deposit, growth rate of lend, growth rate of net interestincome and spread) and draws the experiential conclusion: foreign bank entry hasmuch influence on lending market and profit growth, but this influence can force thereform and development of domestic banking. Foreign bank entry decreases the spreadof domestic banking, and this means the efficiency of domestic banking increases.Foreign bank entry dose not cause the deposit diffluence of domestic banking.