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Discuss how the entry of foreign banks may prove growth-enhancing in a
Finance & Accounting
Pages 16 (4016 words)
Discuss how the entry of foreign banks may prove growth-enhancing in a developing country Introduction The concept of globalization gained increasing acceptance among countries across the world. It encourages nations and their authorities to consider themselves as a part of the international community.
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. This research has tried to evaluate the effects of the operations of the foreign banks on the economies of the developing countries. Foreign Bank Entry in Developing Countries 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 (1985) has observed that the current trend of globalization has also been observed in the international banking sector. Countries have undertaken efforts to integrate their respective banking and financial sectors under a single universal system under the international economy. ...
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