Friday, June 18, 2010

Emerging market banks- home bias is best

Emerging market banks have done much better in the crisis than their counterparts in the west, especially banks in India and China. Return on assets in the crisis years, one finds, was higher than in the pre-crisis years! With loan growth poised to boom, many of the banks in emerging markets will soon catch up with western banks in terms of market cap.

They should not, however, develop global ambitions. The western banks have not succeeded, by and large, on the global stage except for three banks that have been global for a long time now (Citi, HSBC and Stanchart). Home bias is a better prescription for emerging market banks. More in my last ET column, Grow, but don't try to rule the world.


Anonymous said...

Well said bank sectors are really growing up in India.

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Chuck said...

hello sir am doing a dissertation on home bias puzzle as context to emerging markets. are foreign investors bias while investing in developing countries?