ABSTRACT
There is an intense, ongoing debate about the consequences of increased internationalization or globalization of banking. In the past, foreign banks often looked more attractive to host country authorities because they seemed to provide greater transfer of know-how and technology to emerging markets. At the outset of the recent global sub-prime financial crisis, the focus of host country authorities shifted more towards financial stability concerns. There is evidence to support the view that foreign bank entry into domestic banking systems is a stabilizing force for the host economy and results in more efficient allocation of scarce resources. Much of the analysis, however, has been in the context of shocks originating in emerging countries.
