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Discuss how the entry of foreign banks may prove growth-enhancing in a developing country - Essay Example
Author : novakuphal
Finance & Accounting
Pages 16 (4016 words)
This research has tried to evaluate the effects of the operations of the foreign banks on the economies of the developing countries. The research will discuss how the entry of foreign banks may prove growth-enhancing in a developing country. …
This essay discusses the concept of globalization that gained increasing acceptance among countries across the world. It encourages nations and their authorities to consider themselves as a part of the international community. It urges countries to increase their contacts with the outside world and engage in various economic exchanges in the global market. Accordingly, nations have undertaken various measures to accomplish this goal. The concept of globalization has also pervaded the international financial sector. An increasing number of international banks have expressed the desire of expanding their business activities across the globe. Their preferred target of location has been the economies of the developing countries. Most of the developing nations used to operate as closed economies and were served only by the domestic indigenous banks. The operations of these domestic banks were restrictive in their scale and could cater to the financial requirements of a limited section of the population. Thus, the international banks found these economies as ideal locations for establishing their business activities. Foreign bank entry in a specific country is defined as the procedure by which international banks establish their operations in an economy. This is primarily accomplished by introducing a new branch or by setting up a subsidiary bank in the host nation. Tschoegi has observed that the current trend of globalization has also been observed in the international banking sector. ...