The Internationalization of Financial Services: Issues and Lessons for Developing Countries

The internationalization of financial services is an important issue for the strengthening and liberalizing of financial systems in developing countries. There has been considerable support for the view that internationalization can assist countries in building financial systems that are more stable and efficient by introducing international standards and practices. At the same time, there have been concerns about the risks that internationalization may carry for some countries, particularly in the absence of adequate regulatory structures. The chapters in this book examine different aspects of this debate, the relative benefits and costs of internationalization, and together provide an insight into the diversity and significance of the effects of internationalization on domestic financial systems. The collection of papers includes discussion on: the EU experience of internationalization; the political economy of internationalization; the legal/regulatory dimensions of internationalization; the financial services agreement of December 1997; the motivations for and effects of foreign entry on domestic financial systems; the relationships between internationalization and domestic financial reform and capital account liberalization; and case studies focusing on the effects of opening up the financial services sector in various countries. The papers collected in this volume arose from a World Bank funded research project, culminating in a conference, jointly sponsored by the World Bank and the WTO Secretariat, which took place in Geneva in May 1999.