Foreign banks in emerging market economies: changing players, changing issues

Financial sector foreign direct investment in emerging market economies has surged over the past decade. While the benefits of heightened financial sector efficiency and better risk management are widely acknowledged, foreign ownership poses challenges for host countries due to the migration of decision-making and the incongruence of the organisational structures of foreign-owned banks and host country legal and regulatory systems. Many of these challenges will be best met by global coordination on the part of supervisors and central banks.

JEL classification: G200, F210, F230, F360.