These notional capital flows are recorded in the financial account.3 The money does not necessarily flow in and out of the country, it is just recorded as such in the balance of payments.
As already mentioned, banks are special in emerging markets since they take a leading role in development of other financial intermediaries and of financial markets, apart from having a large recourse to public deposits. No doubt, there is nothing like an ‘optimal’ level of governance for one to be satisfied with. The objective should be to continuously strive for excellence.