Impact of Foreign Banks on Banking in Emerging Economies

Topics: Bank, Banking, Investment Pages: 2 (459 words) Published: May 15, 2013
Impact of foreign bank on banking in emerging economies

Increased technology and innovation

International banking in emerging –market have some advantages from the technology and innovation. The advanced technology and innovation system could even surpass the conventional technology and innovation. For example, they could improve productivity, increase in market and increase the competition and so on . Innovations in customer experience and superior customer service delivery, network integration. (Infosys 2000). For example, the internet and computer system have a useful communication system to connect the consumer and bank. In daily life, customer often use the mobile phone, computer transfer the money. At the same time, innovation and technology is a lower cost of the banking system in the emerging market. The increased technology and innovation in emerging market may help the banking system make a clear communication for their employee, shareholder and consumer. As a result, banks in emerging markets are leapfrogging their rich-world rivals in efficiency, technology and innovation (special report international banking 2011).

Increased liquidity and solvency

Comparing with the local banking system, the foreign banks on banking in emerging market have different kind of comparative advantage. The reason is emerging market allow foreign bank entry to local market. This is lead to the higher liquidity and solvency. Foreign direct investment is a useful fund source for local market. At the same time, the foreign banks also have important roles which represent a borrower. For example, foreign banks have an enough capital base and asset. Foreign banks have played a major role in financing emerging market (EMEs) in recent year. Increased liquidity and solvency has helped emerging markets to develop their economies and allocate capital and financial know-how efficiently across countries (Agustín Villar )

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