2 For instance, see Levine (1996); Claessens and Glaessner (1998); Claessens et al., (1998); Also see Tamirisa and Sorsa (2000). 3 See Kono and Schuknecht (1999). 4 Kroszner (1998).

s For discussions of the overseas expansion of Singapore's largest domestic banks, see Tschoegl (2001) and IMF (2005). A caveat is in order. Some observers have argued that Singapore still appears to be hesitant in allowing greater foreign banks into their countries from countries like India citing inadequate prudential standards despite Indian banks being relatively strong by international standards. For instance, see http://www.thehindubusinessline.com/2009/OS/10/stories/2009051050840300.htm. For more discussion of India's overseas investments in general, see Rajan (2009). Negishi and Inoguchi (2006). 8 Claessens and Glaessner (1998). 9 In view of this, trade agreements which give preferential access to foreign banks from only one or two countries (something that could happen with bilateral trade agreements) should be eschewed in favour of a more broad-based liberalization on a multilateral basis. 10 We exclude Singapore and Hong Kong as they are regional financial centres.

11 Although the law does not yet permit foreign banks to establish new fully foreign-owned banks in Indonesia, foreigners can acquire 99 per cent of existing banks' shares.

12 Malaysia is also in this category of cautious liberalizers with minimal changes during the period under consideration.

13 Entitled "Roadmap for presence of foreign banks in India", Reserve Bank of India 2005. http://www.rbi.org.in/upload/content/images/RoadMap.html. �4 Data for foreign bank assets are more easily available and hence more complete (and likely accurate) than that of foreign bank deposits.

15 The Committee on the Global Financial System is a central bank forum established by the Governors of the G10 central banks to monitor and examine broad issues relating to financial markets and systems. See CGFS (2003). Also see Rtsn (2003). See The Economist (February 8, 2003) for a general survey of Asian financial systems post-crisis. 16 This section builds upon Rajan and Gopalan (2009).

�� For a discussion of the nexus between foreign bank entry and capital account regulation, see Kono and Schuknecht (1999) and Tamirisa (1999). The latter study finds that while financial service liberalization in general has insignificant effects on capital inflows, different modes of entry and different types of financial services (e.g. banks versus insurance) could have differential effects on capital flows. There is evidence that the former inevitably leads to de facro weakening of capital controls. For some evidence of this in the case of China, see Liu (2005). �8 See Clarke et al., (2003) and World Bank (2008).

For Korea, see Kim and Lee (2004). For India, see Gormley (2006). 2" Islam and Rajan (2009) discuss this bank lending channel during the ongoing global financial crisis with specific focus on India. The World Bank (2008) finds that a higher presence of foreign banks tends to reduce the transmission of policy interest rates as foreign banks may be less sensitive to domestic monetary conditions.

China Banking Regulatory Commission (2006), "Regulations for the Administration of Foreignfunded Banks", November. Accessible at: http://www.cbrc.gov.cn/english/home/jsp/ docView.jsp?docID=2871.

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Claessens, A., Demirgüç-Kunt and H. Huizinga (1998), "How does Foreign Entry Affect the Domestic Banking Market?", Policy Research Working Paper No. 1918, World Bank (June).

Claessens, S., and T. Glaessner (1998), "Internationalisation of Financial Services in Asia," Policy Research Working Paper No. 1911, World Bank (April).

Clarke, G., R. Cull, M.S. Martinez Peria and S.M. Sanchez (2003), "Foreign Bank Entry: Experience, Implications for Developing Economies, and Agenda for Further Research," The World Bank Research Observer, 18, pp. 25-59.

Committee on the Global Financial System (CGFS), "Financial Sector FDI in Asia ― Brief Overview", mimeo March 6, 2003, pp. 1-2.

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East Asian Analytical Unit Report (1999), "Asia's Financial Markets: Capitalising on Reform", Department of Foreign Affairs and Trade, Australia.

Economist Intelligence Unit (EIU), Country Finance Reports, various years.

Gormley, T.A. (2006), "Banking Competition in Developing Countries: Does Foreign Bank Entry Improve Credit Access," mimeo, November.

IMF (2005), "Singapore: Selected Issues," Country Report No. 05/140, IMF, pp. 9-15.

Islam, M.S., and R.S. Rajan (2009), "Monetary Policy Transmission Channels Revisited: India and the Global Financial Crisis," Institute of South Asian Studies, National University of Singapore, mimeo, June.

Kim, H.E. (2005), "Domestic Financial Liberalization, Stabilizing Effects of Foreign Bank Entry, and Challenges to Bank Supervision: The Korean Experience", Bank of Korea, March.

Kim, H.E., and B.Y. Lee (2004), "The Effects of Foreign Bank Entry on the Performance of Private Domestic Banks in Korea," mimeo, March.

Kono, M., and L. Schuknecht (1999), "Financial Services Trade, Capital Flows, and Financial Services," Staff Working Paper ERAD No. 98-12, WTO.

Kroszner, R. (1998), "On the Political Economy of Banking and Financial Regulatory Reform in Emerging Markets," Research in Financial Services, 10, pp. 33-51.

Leigh, L. and R. Podpiera (2006), "The Rise of Foreign Investment in China's Banks - Taking Stock", IMF Working Paper, December.

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Lindgren, C.J., T.J.T. Balino, C. Enoch, A.M. Guide, M. Quintyn, and L. Teo (2000), "Financial Sector Crisis and Restructuring Lessons from Asia", Washington, DC: IMF.

Liu, L.G. (2005), "The Impact of Financial Services Trade Liberalization in China," mimeo, September.

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Negishi, S., and M. Inoguchi (2006), "Towards Financial Integration in Asia: Implications of Foreign Bank Entry in Banking Systems," mimeo, October.

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Rajan, R.S. and G. Bird (2002), "Still the Weakest Link: The Domestic Financial System and PostCrisis Recovery in East Asia," Development Policy Review, 19, pp. 355-66.

Rajan, R.S. and S. Gopalan (2009). "Foreign Bank Entry Reconsidered." Policy Brief No. 111, Institute of South Asian Studies, 15 June 2009.

Reserve Bank of Australia (RBA) (2003), "Foreign Participation in East Asia's Banking Sector", mimeo, June.

Reserve Bank of India (RBI) (2005), "Roadmap for Presence of Foreign Banks in India" (February), accessible at: http://www.rbi.org.in/upload/content/images/RoadMap.html.

Tamirisa, N., P. Sorsa, G. Bannister, B. McDonald and J. Wieczorek (2000), "Trade Policy in Financial Services," Working Paper No. 00/31, IMF.

Tamirisa, N. and P. Sorsa (2000), "International Capital Markets", Washington, DC: IMF, Chapter 6.

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TheEconomist, February 8, 2003.

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