1. Introduction {#sec0005}
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Globalization in banking has been part of the inherent international economic and financial linkages in the past few decades. The collapse of the Soviet Union and liberalization in Latin America have provided opportunities for foreign banks to enter countries in Central and Eastern Europe and Latin America in the 1990s. In recent years, further liberalization of financial services in other parts of the world, such as Asia, has prompted large banking institutions to invest in countries such as China and India. In tandem with the growing trend of bank globalization, research on globalization in banking has thrived as well. Many studies have examined the effects of bank globalization at the macro level. Some investigate the role banks play in the international transmission of shocks and co-movementsstandard deviation of the return on assets, which is calculated only for banks with at least four consecutive years of dataBankScope***Macroeconomic variables:***GDP per capitaGDP per capita, in thousands of 2005 constant US dollarsWorld Development IndicatorsGDP growthGrowth rate of the GDP, as a percentage***Financial environment variables:***Financial freedomMeasure of independence from government control and interferenceHeritage FoundationBoone indicatorElasticity of profits to marginal costs, a measure of the degree of competitionGlobal Financial Development DatabaseHHIHerfindahl--Hirschman Index, i.e., the sum of the squares of bank market shares in a countryBankScopeDeposit money bank assetsClaims on the domestic real nonfinancial sector by deposit money banks as a share of the GDPGlobal Financial Development DatabaseStock market capitalizationValue of listed shares as a share of the GDP***Legal Variable:***Rule of lawPerceptions of the extent to which agents have confidence