As domestic financial institutions start to lose business to better-run and more trustworthy foreign institutions, they will realize the need for a better legal and accounting infrastructure that will make it easier for them to make loans to new customers. Domestic financial institutions will then be far more likely to advocate for and support the reforms that achieve this result.
Of course, this is not to say that in a genuinely corrupt and anticompetitive environment financial globalization, by itself, can still engender an efficient, dynamic, and modern financial system. Recent research has shown that when some countries opened up to international capital markets too soon in the absence of some basic supporting conditions, vulnerabilities to sudden stops of capital flows increased.