Foreign direct investment (FDI) into the financial sectors of emerging economies soared during the 1990s, leaving many countries with banking sectors owned primarily by foreign institutions. While the implications of FDI into emerging markets are well documented, less clearly understood is how...

In the decade prior to the financial crisis, foreign banks’ exposure to U.S.-dollar-denominated assets rose dramatically. When the crisis hit in 2007, the banks’ access to dollar funding came under severe duress, with potentially dire consequences for global financial markets that could also...