The restrictions imposed on foreign banks operating in the developing countries since the 2007-09 global financial crisis are hampering better growth prospects by limiting the flow of much-needed financing to firms and households, a World Bank report has warned. In its annual ‘Global Financial Development Report 2017/2018: Bankers without Borders”, the World Bank said that international banking can have important benefits for development, but is no panacea and carries risks. Developing economy policymakers would do well to consider how to maximize the benefits of cross-border banking while minimizing its costs. Developing countries can maximize benefits from a stronger banking system while shielding against risks through improving information sharing through credit registries, enforcing property and contract rights, and guaranteeing strong supervision of banks. Enabling foreign bank entry and improving financial openness -alongside well-functioning capital markets – can offer systemic benefits, including improved financial stability, greater competition, and improved resilience to economic shocks.

(The Hindu)