Why Banks Go to Emerging Countries and What is The Impact for the Home Economy? A Survey

BBVA, Working Papar No. 0602

Journal of Financial Decision Making December Vol. 4 No. 2, 2008;

30 Pages Posted: 24 Sep 2016 Last revised: 4 Aug 2021

See all articles by Alicia García-Herrero

Alicia García-Herrero

Bruegel; Hong Kong University of Science & Technology (HKUST) - HKUST Institute for Emerging Market Studies (IEMS); Natixis

Daniel Navia

Banco de España

Date Written: September 29, 2006

Abstract

This paper reviews the theoretical and empirical literature explaining financial FDI from the perspective of the investing country (home). We conclude that the existing theoretical paradigms need to be adapted to explain the recent surge in international banks’ local operations in the financial sectors of emerging countries. Macroeconomic and risk diversification theories would seem particularly well-suited to explain this reality. The empirical literature on the reasons why banks from decide to go broad has concentrated on bank-specific factors and much less so on macroeconomic determinants of the home country. Finally, the effects of financial FDI on the home country’s economy and/or financial system are virtually unknown.

Keywords: financial FDI, home country

Suggested Citation

Garcia-Herrero, Alicia and Navia, Daniel, Why Banks Go to Emerging Countries and What is The Impact for the Home Economy? A Survey (September 29, 2006). BBVA, Working Papar No. 0602, Journal of Financial Decision Making December Vol. 4 No. 2, 2008;, Available at SSRN: https://ssrn.com/abstract=2831448 or http://dx.doi.org/10.2139/ssrn.2831448

Alicia Garcia-Herrero (Contact Author)

Bruegel ( email )

Rue de la Charité 33
B-1210 Brussels Belgium, 1210
Belgium

Hong Kong University of Science & Technology (HKUST) - HKUST Institute for Emerging Market Studies (IEMS) ( email )

IAS 2019, Lo Ka Chung Building,
Lee Shau Kee Campus, HKUST
Clear Water Bay, Kowloon
Hong Kong

Natixis ( email )

France

Daniel Navia

Banco de España ( email )

Madrid 28014
Spain

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