GLOBALIZATION OF BANKING

The globalization of banking refers to the increasing interconnectedness and integration of banking systems and institutions across national borders. This process has been driven by various factors, including advancements in technology, deregulation, and the liberalization of financial markets.

Diversified ownership and increased foreign ownership: Globalization has led to diversified ownership or increased foreign ownership in the banking industry in host countries. This means that banks from different countries have a presence in various markets, contributing to the integration of the global banking system.  

Benefits and risks: International banking has the potential to contribute to faster growth and stability by making financial services more accessible. however, it also poses risks, as global banks can enhance the international transmission of shocks through their activities.

Effects on macroeconomic variables: Research has shown that bank globalization has significant impacts on macroeconomic variables. For example, the availability of international banking services can contribute to economic growth and financial development

Effects on micro or bank level: Bank globalization can also have effects at the micro or bank level. Some studies have examined whether bank globalization helps improve bank performance. As stock markets develop and better availability of information increases, the potential pool of borrowers also grows making it easier for banks to identify and monitor them.

Structural transformations and regional focus: Global banking is going through some important structural transformations, with a greater variety of players and a more regional focus. This means that while the global banking system is becoming more integrated, there is also a growing emphasis on regional markets and players.

Technology and Fintech: Technology, especially in the form of Fintech firms that work globally, is playing a significant role in the globalization of banking. This can both facilitate and disrupt traditional banking services, leading to new challenges and opportunities for the global banking industry.