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Foreign bank presence and business regulations

Georgios Kouretas () and Chris Tsoumas ()

Journal of Financial Stability, 2016, vol. 24, issue C, 104-116

Abstract: We examine the impact of foreign bank presence on a host countries’ business regulatory environment. We employ a panel dataset of 87 developing economies for the 1995–2013 period and measure the efficiency of business regulations using the indices from the Heritage and the Fraser datasets. Our results show that foreign bank presence exerts a positive impact on the efficiency of business regulations; however, we find no evidence in favor of a more pronounced positive effect when foreign banks originate from countries that have a more efficient business regulatory environment. Moreover, host countries’ administrative requirements and, particularly, bureaucracy costs benefit from a foreign bank presence; however, cost and time procedures to start a business do not.

Keywords: Foreign banks; Business regulations; Panel data (search for similar items in EconPapers)
JEL-codes: F30 G21 K20 O50 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1016/j.jfs.2016.04.006

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Journal of Financial Stability is currently edited by I. Hasan, W. C. Hunter and G. G. Kaufman

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