ABSTRACT
The banking expansion was dramatically accelerated by the imbalances created by the oil crisis. The sharp increase in the world market price of oil caused a sudden and large rise in the demand for private international capital, while the surplus oil-exporting countries placed a sizeable proportion of their disposable funds with banks in the major capital market countries. Thus, ‘the demand for the intermediary services of banks rose sharply [emphasis added]’.2 The oil shock provided the banking sector with vast new loanable funds and stimulated their international activities by relaxing the three already mentioned constraints that still limited their expansion: lack of support by international organisations, lack of capital to fund new ventures and lack of incentives to expand abroad given the favourable domestic context.
