|**Variable**|**Definition**<br>**Appendix - Variable Definitions and So**|**Source**<br>**urces**|
|---|---|---|
|_ForCont_|Ratio of the sum of assets of foreign banks in host country_i_ that are<br>owned by banks from source country_j_, divided by the total amount<br>of bank assets in host country_i_.|Bankscope|
|_Insthost_|The simple average of six indicators of quality of institutions in the<br>host country (voice and accountability, politial instability and<br>violence, government effectiveness, regulatory quality, rule of law<br>and control of corruption) measured in 2000.|Kaufmann, Kraay and Mastruzzi (2005)|
|_DiffInst_|The absolute difference between quality of institutions of source and<br>host countries measured in 2000, based on the simple average of the<br>absolute difference of each of the six indicators of quality of<br>institutions.|Kaufmann, Kraay and Mastruzzi (2005)|
|_CompAdv_|Institutional quality of the host country interacted with the difference<br>between the institutional quality of the source country and that of the<br>competitors. Institutional quality of competitors is measured by<br>taking the weighted average (based on GDP in current dollars) of the<br>institutional quality of each of the possible source countries. All<br>variables are measured in 2000.|Kaufmann, Kraay and Mastruzzi (2005)<br>and International Financial Statistics|
|_Collinks_|Dummy which is 1 if host and source country have had colonial links<br>either between colonizer and colony or between those countries<br>having been colonized by the same colonizer after 1945, zero<br>otherwise.|CIA World Factbook (2005)|
|_Border_|Dummy which is 1 if the countries share a border, zero otherwise.|CIA World Factbook (2005)|
|_Comlang_|Dummy which is 1 if the countries share the same language, zero<br>otherwise.|CIA World Factbook (2005)|
|_Distance_|The log of the distance between the host and source countries, zero<br>otherwise.|CIA World Factbook (2005)|
|_Trade_|Log of export plus import between the source and host countries<br>measured in 2000.|UN Comtrade|
|_LegalDif_|Dummy which is 1 if the origin of the legal system of host and<br>source country differ, zero otherwise.|Easterly<br>and Sewadeh (2001) Global<br>Development Network Growth Database<br>and CIA World Factbook (2005)|
|_GDPhost_|Log of GDP in current US dollars in host country, measured in 2000|International Financial Statistics|
|_FinDepthhost_|Log of M2 as percentage of GDP in the host country in 2000.|International Financial Statistics|
|_Entryres_|Dummy which is 1 if foreign bank entry is restricted, zero otherwise.<br>Foreign bank entry is considered restricted when foreign ownership<br>is limited to be less than 50 percent, or when no branches or<br>subsidiaries can be openened, or when only banks from countries<br>that are considered well-supervised can enter the market. Entry<br>restrictions are based on 2005.|Barth, Caprio and Levine (2006) updated<br>with information from several sources|
|_GDPsource_|Log of GDP in current US dollars in source country, measured in<br>2000|International Financial Statistics|
|_GDPcapsource_|Log of GDP per capita in current international $ in source country,<br>measured in 2000|World Development Indicators|

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