INTERNATIONAL LABOR MIGRATION AND FOREIGN BANK PENETRATION IN DEVELOPING ECONOMIES

Abstract

This paper examines the impact of international labor migration on foreign bank presence in 30 Asian and Latin American countries. While it is well established that social and economic characteristics of the host economy influence entry by foreign banks, we test whether social and economic linkages between bank-host and bank-origin economies influence foreign bank activity. In particular, we consider whether international migration from bank-host to the bank-origin countries affects foreign bank activity. Panel Tobit models find that international migration promotes foreign bank presence. Banks originating in industrialized nations with large immigrant populations tend to expand into migrant-source developing countries.