Foreign and domestic bank participation in emerging markets: lessons from Mexico and Argentina B. GERARD DAG E S, LIN DA GOLDBE RG AND DA NIEL KINNEY

Over the past decade, numerous financial systems have opened up to direct foreign participation through the ownership of local financial institutions, frequently as a direct consequence of – and as a perceived solution to – financial crises. Significant increases in such foreign participation have characterized the transition experience of Eastern Europe and the postTequila Crisis period in Latin America. However, the crisis experience in Asia has been markedly different to date, and is more notable for the limited nature of majority investments by foreign banks, despite the need for largescale recapitalization of the region’s troubled financial systems.