Rethinking regulation: international banks in Asian emerging markets

Financial systems in Asian emerging market economies are seen as resilient because of their performance during and after the 2008 crisis. But such assessments focus on the current status rather than the direction of evolution of those systems, many of which are being substantially liberalised. One consequence is the growing presence of foreign banks in these markets, invited on the grounds that they would enhance competition and induce domestic banking systems to adopt better technologies and practices. By contrast, it is here maintained that what they are likely to do is alter banking behaviour in ways that are inimical to growth and inclusion and increase instability.