Effects of Financial Crises on Foreign Bank Ownership

by

Faculty Sponsor: Ryuichiro Izumi

Live Poster Session: https://wesleyan.zoom.us/my/pwatcharapong

Pat's profile
Pat (Putt) Watcharapong

Pat is a rising senior (’25) from Bangkok, Thailand. He is majoring in Economics and works as a Microeconomics teaching assistant. Outside of Economics, he studies Art Studio and is active in Asian identity groups as President of the Thai Student Association and Cultural Liaison Chair of the Asian American Student Collective.

Abstract: Financial crises often lead to currency depreciation and lowered economic output. These patterns can elicit changes in foreign perception of the afflicted economy and, subsequently, foreign investments in domestic companies. This research aims to capture the effects of financial crises on the proportion of commercial banks majority held by foreign entities. The data studied encompasses 136 countries across two major crises (the 1997 Asian Financial Crisis and the 2007 Global Financial Crisis) and countries are divided into 2 income groups (Developing Economies & Emerging Markets and OECD & Other High-Income Economies). Foreign bank ownership proportion is analyzed in relation to macroeconomic variables in multiple linear regression. Findings indicate that Developing Economies & Emerging Markets saw significant increases in foreign bank ownership following the start of the Global Financial Crisis, whereas OECD & Other High Income Economies experienced little to no change. GDP, Foreign Direct Investment, Current Account Balance, and Real Interest Rates were found to be significant predictors of foreign bank ownership proportion.

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