Foreign banks activities and factors affecting their presence in Malaysia

Abstract

This paper assesses the presence of foreign banks in Malaysia and analyses their distribution by the country of origin. The paper uses a model developed by Grosse and Goldberg (1991) to test the determinants of the number of offices of foreign banks in Malaysia based on the country of origin. The empirical results indicate that the size of the banking sector in the foreign country, foreign trade with Malaysia, and country risk are positively correlated with foreign banks' presence in Malaysia. Geographic distance and foreign direct investment in Malaysia are not related to foreign banks' presence in Malaysia.