A History of the Global Economy
The Inevitable Accident
Colin White
Nanak Kakwani and Hyun Hwa Son
Nanak Kakwani and Hyun Hwa Son
Varieties of Capital Cities
The Competitiveness Challenge for Secondary Capitals
David Kaufmann
Robert Cull, Maria Soledad Martinez Peria and Jeanne Verrier
This chapter presents recent trends in government and foreign bank ownership across countries and summarizes the evidence regarding the implications of bank ownership structure for bank performance and competition, financial stability, and access to finance. The empirical evidence reviewed suggests that foreign-owned banks tend to be more efficient than domestic banks in developing countries, promote competition in host banking sectors, and help stabilize credit when host countries face idiosyncratic shocks. But there are trade-offs, since foreign-owned banks can also transmit external shocks and might not always contribute to expanding access to credit. The record on the impact of government bank ownership suggests few benefits, especially for developing countries. While government-owned banks can help stabilize credit growth during crises, they have a negative impact on competition and performance and provide no clear benefits when it comes to expanding access to credit. In contrast, government bank ownership can lead to resource misallocation, since government-owned banks are prone to engage in political lending.