> If you don't allow massively consolidated domestic banks to operate in your country, why would you allow massively consolidated foreign banks to do so instead and "colonize" you?
These days if you're a country and you want to grow then you need capital investment. Now that war and conquest and slavery are severely frowned upon there's really no other way to achieve growth but to get some rich <strike>lord</strike> investor to give you a bunch of money on "friendly" terms. (And for the investor class it's all about how "friendly" you are. Countries that are friendly to investors can thrive. Countries that aren't usually get fucked. This is the real reason China is so deeply scary to the global investor class.)
The capital investment needed to sustain growth can either come from domestic sources or foreign sources. Of course if your country has very limited financial infrastructure it basically must come from abroad. Again, for various reasons, as the Cubans have discovered, you can't really self-bootstrap a modern industrial economy. (Unless you're the British Empire and you're willing to go out and conquer half the planet and feed that into your nascent industries. But again this sort of thing is no longer kosher these nowadays.) So you must go begging to the foreign creditors who will demand "friendly" terms not unlike what the British offered eg India.
Note that this dynamic is play even for powerful and developed countries. The reason Britain continues to defend and support and bail out its highly dysfunctional banks is because it knows very well what will happen if those banks collapse. The British private sector will get the capital it desperately needs to grow from foreign banks. And once that happens it would be completely at the mercy of foreign creditors. This is the real reason nations must defend/bailout their banks.
> I don't think those things can fill these void left by a lack of community banks.
There's no such thing as a community bank as you imagine it. You can create mission oriented banks (eg banks focused on some credit-starved minority) but these are rarely profitable in the classical sense. In the end the only "defense" against global banks is to have your own global banks. The only defense against being indebted to foreign creditors is being able to capitalize the majority (50+%) of your own growth.