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The paper was started while the authors were at the World Bank. We are grateful to Allaeddin Twebti, Matias Gutierrez and especially Tugba Gurcanlar and Joaquin Mercado for their help with collecting the data and to Mattia Landoni and Deimante Morkunaite for providing excellent research assistance and Zeynep Elif Aksoy for help with the data. We would like to thank Harry Huizinga, Luc Laeven, Joe Peek and seminar participants at the Central Bank of the Netherlands, the European Bank for Reconstruction and Development, the University of Amsterdam and the 24th Annual European Economic Association Meetings (Barcelona) for comments. Financial support for this project from the World Bank’s Research Support Budget and the United Kingdom’s Department for International Development (DECRG trade and services project) is gratefully acknowledged. The views expressed in this paper are those of the authors and do not necessarily represent those of the institutions with which they are or have been affiliated.
As well as on the contribution of foreign banks to overall financial sector development, access to financial services, financial stability, but those aspects are not analyzed here
The database does not include countries with less than five active banks in Bankscope. The cutoff of 2006 avoids any inference from the 2007-08 global financial crisis.
The full database also includes saving banks, cooperatives, bank holding companies and long term credit banks, however to keep the banks in the database as homogeneous as possible we only use commercial banks in this paper. Commercial banks account for 90% of all the banks in the database.