Can Foreign Banks Contribute to Financial Inclusion? – eSocialScience Op-Ed by IEMS’ Sasidaran Gopalan

Published on: 2015-07-03

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IEMS’ Sasidaran Gopalan was featured in an eSocialScience op-ed on the effect of foreign bank entry on financial inclusion in a given country, with a particular focus on India and other emerging market countries.

As quoted by Dr. Gopalan’s Op-Ed:

Recent research by the authors empirically examines how foreign banks affect financial
inclusion in 57 emerging and developing economies in the period 2004-2009. They found that
foreign banks contribute positively to enhancing financial inclusion. More specifically, their
results suggest that foreign banks tend to ease constraints such as inability to provide physical
access points for delivery of financial services (such as ATMs). Since ATMs are much more
cost-effective and require the least amount of investment commitment and many basic banking
transactions occur through ATMs in the advanced economies, policies promoting such physical
points of access would likely enhance financial inclusion. However, they also find an important
qualification to our results in that the net positive impact of foreign bank entry on financial
inclusion tends to weaken when an economy experiences greater banking concentration
following entry of foreign banks.

Read the full article here: eSocialScience

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