ABSTRACT
This chapter reviews the structure of the banking industry, and especially the impact of regulation on domestic and international structure. It aims to evaluate several theories of international banking, and seeks to establish the implication of each theory for the structure of the industry. The chapter examines some financial data in an effort to predict or forecast how the international bank structure will evolve. It summarizes the data on protection in international banking. The chapter discusses the implication of protection in banking, and the impacts of financial liberalization on the structure of the banking industry. The theory of international banking seeks to explain the ownership structure in the banking industry - and why banks headquartered in one country establish offices in other countries. The cost-of-capital argument for the banking industry is that the lower the cost of capital to an individual bank, the more rapid the rate at which this bank will expand.
