The Impact of Foreign Banks on the Stability of the Host Economy
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Publish date: 2012-08-31
Gospodarka Narodowa 2012;257(7-8):27–43
The article attempts to answer the question whether, to what extent and by what mechanisms foreign banks can influence the macroeconomic and financial stability of the host economy. This problem has been widely analyzed in the literature, with researchers highlighting both the opportunities and risks related to the presence of foreign banks. Critics argue that foreign banks tend to discriminate against local firms, especially small and medium-sized ones. Foreign-owned banks are also criticized for draining funds from the local market, especially at a time of a downturn in the home economy, and for siphoning off foreign exchange reserves. These arguments are neither confirmed nor disproved by economic theory and empirical studies, Lubiński says. This testifies to the complexity of the issue and calls for caution in voicing opinionated views, the author adds.