The Entry Of Foreign Banks And Banking Stability

With the trend of closer and closer contact in the economic and financial fields, many countries have allowed foreign banks to entry into the domestic banking markets. Foreign bank entry has a few effects on the domestic banking system, and the most important thing is that it has the effect on the banking stability. In the disquisition I have analyzed the facts which may have efficient impact on banking crises and banking stability. After that I use Logit model to analyze the data during 1988-2000 of 50 countries, including 22 developed countries and 28 developing countries and have studied the influence of foreign bank entry, economy, and finance construction to banking stability. There are three conclusions can be drawn: Firstly, foreign bank entry can decrease the probability of banking crises, so it increases the level of banking stability; Secondly, foreign bank entry has the positive effect on the domestic banking stability through improving the competitive condition, and in the initial stage of entry the effect doesn't perform distinctly. It maybe has the negative impact at the initial stage, but it definitely has the long-range rewarding influence; finally, fewer foreign banks entry into developing countries than into developed countries. The impact of foreign bank entry in developing countries is not as efficient as in developed countries, so there should be some conditions in which foreign bank entry may increase the domestic banking stability. Considering the facts of banking...