Banking in Africa

From this paper by Thorsten Beck & Robert Cull 

African banks are well capitalized and over-liquid, but lend less to the private sector than banks in non-African developing countries.

Financial Systems in Latin America

. . . [F]inancial systems in the Latin America and the Caribbean region have become more diversified and more complex. In particular, domestic financial systems have become less bank-based, with bond and stock markets playing a larger role; institutional investors have gained some space in channeling domestic savings, thus increasing the availability of funds for investment in capital markets; and several economies in the region have started to reduce currency and maturity mismatches. Nonetheless, a few large companies continue to capture most of the domestic savings. And because these trends have unfolded more slowly than pro-market reformers had envisioned, broad, market-based financial systems with dispersed ownership have yet to materialize fully in the region. As a result, convergence is still largely failing to happen and the region’s financial systems remain less developed than those of the advanced economies and several other emerging economies, most notably those in Asia.

That is from a paper by Tatiana Didier & Sergio L. Schmukler.

The Impact of Foreign Bank Penetration on the Domestic Banking Sector in China

Abstract:

Using a newly constructed disaggregated measure, the foreign bank branch influence index (FBBII), to proxy the domestic banks’ foreign exposure, this study investigates the influence of foreign entry on the performance of local banks based on a sample of 107 Chinese commercial banks during the period of 2002 to 2011. It was found that the increased presence of foreign banks has improved the profitability of domestic banks and that this might be due to the higher efficiency achieved by the latter. In addition, the domestic banks were also found to increase their non-interest income when faced with greater foreign exposure and such a positive relationship is found to be most significant among the joint stock banks. Finally, this study also found consistent evidence that foreign bank penetration could help the domestic banks improve their risk management capacity, in particular among banks with foreign strategic investors.

That is from a new paper by Luo et al (June 2013).  
From the conclusions:

Based on four performance indicators, it could be concluded that increased foreign entry has generated a significant positive impact on the Chinese banking sector and banks, with foreign strategic investors (FSI) tending to react more actively to the changing operational environment. Nevertheless, the state-owned banks are hardly influenced. Despite all the reforms, they retain the monopoly power over the whole industry and hence are less sensitive to the additional competitional pressure exerted by foreign banks. To enable the Chinese banking sector to continue to improve its efficiency, restrictions imposed on foreign banks should be further relaxed. Particularly in the case of the FSIs, they should be allowed to acquire a larger banking stake so as to gain more effective control. P. 28.

Financial systems, innovation, and patents

Although ideas production plays a critical role for growth, there has been only a modicum of research on the role played by financial forces in fostering new inventions. Drawing on Schumpeterian growth theory, this paper tests the roles of risk capital and private credit in stimulating knowledge production. Using panel data for 77 countries over the period 1965-2009, it is found that countries with more developed financial systems are more innovative. A stronger patent protection framework, on the other hand, curbs innovative production.

That is the abstract of the new paper "Risk capital, private credit and innovative production" by Ang and Madsen (2012). 

HT: Laura Stefanescu.