2001; Levine 2002; Demirgüç-Kunt and Maksimovic, 2002). Figure 2 presents data over time and across country income groups (medians) for Private Credit by Deposit Money Banks and Other Financial Institutions to GDP, a standard indicator of financial intermediary development in the finance and growth literature. The figure shows that Private Credit varies positively with countries‟ level of economic development and has been increasing steadily especially in high-income countries. Figure 3 presents similar data for Stock Market Capitalization to GDP which indicates the size of the stock market relative to the economy. Figure 3 shows that this also varies positively with the level of economic development and has shown steep increases across all income groups over time. <mark>Demirguc-Kunt, Feyen, and Levine (2011) argue that financial structures may be better at promoting economic activity at different stages of a country‟s economic development.</mark>

**_4. Access to Foreign Capital:_** There has been a large increase in global IPO activity and seasoned equity offerings over the last decade <mark>suggesting that with globalization, home institutions and laws are becoming less important in raising financing on capital markets (</mark> Doidge, Karolyi, and Stulz, 2011; Kim and Weisbach, 2008). A foreign listing comes with many associated benefits including reduced cost of capital, an increased shareholder base, greater liquidity, enhanced prestige, and increased share price (e.g. Stulz, 1999; Karolyi, 2006; Doidge, Karolyi, and Stulz, 2004; Levine and Schmukler, 2007).

In addition, foreign direct investment (FDI) into the home country offers a partial substitute for local finance by easing financing constraints for large firms (e.g. Harrison, Love, and McMillan, 2004).

Foreign bank entry has potential for net benefits including introducing competition and increasing efficiency (e.g. Claessens, Demirgüç-Kunt, and Huizinga 2001; Bonin, Hasan, and Wachtel, 2004) and improving access to credit, especially for large firms (e.g. Clarke, Cull, and Martinez Peria, 2006). However, the empirical evidence also suggests that the underlying country-level institutional environment is an important determinant of the effects of foreign banks on lending in developing countries (e.g. Detragiache, Tressel, and Gupta, 2008; Gormley, 2010; Mian, 2006). The benefits of foreign banks are greater in countries with the necessary information and contractual frameworks and incentive structures that can facilitate automated transactions lending, which is the comparative advantage of foreign banks.

**_5. Cross-border Mergers:_** There has been a rapid increase in cross border merger activity over the last few years, with a vast majority involving private firms. Higher valued firms and firms from wealthier countries typically purchase lower valued firms and firms from poorer countries (Erel, Liao, and Weisbach, 2011; Makaew, 2010). Cross-border mergers come in waves that are correlated with business cycles (Makaew, 2010) and are influenced by geographic distance between acquirer and target, currency movements, and their stock market performances (Erel, Liao, and Weisbach, 2011).

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