Does Foreign Bank Penetration Reduce Access to Credit in Developing Countries? Evidence from Asking Borrowers
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...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2001/11/1631787/foreign-bank-penetration-reduce-access-credit-developing-countries-evidence-asking-borrowers http://hdl.handle.net/10986/19437 |
| Summary: | 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. |
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