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International Banking: A Myth? Access Gap in Cross-border Trade Finance

by Shruti Sood

World’s local bank – is there such a thing? It would seem not, or so suggests the data. Foreign banks share of banking sector assets is abysmally low especially so for large emerging market countries. Apart from the asset size of foreign banks, participation in cross border settlements is low as well. Growth of emerging economies, that have deeper roots and larger credit appetites, are typically supported by domestic banks - as the chart shows for China and India, which are 2nd and 6th largest economies in the world. To be fair, there is also the case of regulatory advantage which is sometimes skewed in favour of domestic banks and supporting the local currency.

The next level of analysis is to see how spread out this access to foreign financial institutions actually is.

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