Have The Recent Crisis Affected Foreign Banks' Positions In Central And Eastern Europe?(IGeneral Overview) (original) (raw)
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The aim of this paper is to investigate the extension to what foreign banks reacted during recent crisis in supporting their subsidiaries and thus the host economies. The analysis focuses on a brief theoretical overview and an analysis in terms of foreign claims regarding selected Central and Eastern European countries. We are also interested in finding if the entry mode (acquisition of a existing local bank, greenfield investment, non-resident office) did matter in this issue.
Foreign Banks' Entry into Central and East European Markets: Motives and Activities
Post-Communist Economies vol.11 No.4, 1999
This article presents some theoretical issues of multinational banking and their application to the pattern of foreign banks' operations in three selected Central European countries: Poland, Hungary and the Czech Republic, using postal survey results and an OLS/logit model of entry determinants. Additionally, the effects of foreign banks' entry in these countries are discussed. A detailed review of foreign banks' activities is presented in the Appendix. Foreign banks appear to be one of the most important factors influencing the shape of banking sectors in the countries analysed. However, banks' profiles differ, depending on the individual host country's level of development and privatisation progress. Generally, their activities tend to focus mostly on corporate services, while the perceived need for support of the client base is the most important reason for expansion. Although the direct benefits from entry are limited, indirect ones are quite evident, especially in the areas of corporate finance and foreign trade services.
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Foreign banks have played a major role in Central and Eastern European economic landscape over the last decades. They have spurred banking intermediation and fuelled economic growth for years. However, the global financial crisis unveiled the other side of the coin. This article analyses foreign banks' lending behaviour in Central and Eastern Europe over the period from 2000 to 2016. It aims to investigate the nexus between bank loan growth, cross-border bank claims and the cycle period. Moreover, it captures the impact of the financial cycle on foreign banks' credit behaviour and highlights whether foreign bank ownership is influenced by host-and home-country effects. Our findings reveal the strong nexus between foreign banks' loan growth and cross-border bank claims. Also, we emphasize the pro-cyclicality of foreign banks' loan growth and cross-border bank claims. Furthermore, we see clear differences related to foreign banks' lending behaviour during normal and turbulent times, triggered by host-and home-country effects. These results raise policy challenges regarding the right bank ownership balance and the use of prudential regulation.
The Economic Determinants and Engagement Models of Foreign Banks in Central Europe
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In the last fifteen years foreign banks have expanded their presence significantly in almost all developing economies. The transition countries are among those economies that have experienced one of the highest levels of banking internationalization in the world. The foreign controlled banking asset in these countries ranges from 70 per cent in Poland to almost 100 per cent in Slovakia.
Economic Determinants and Entry Modes of Foreign Banks into Central Europe
SSRN Electronic Journal, 2000
In the last fifteen years foreign banks have expanded their presence significantly in almost all developing economies. The transition countries are among those economies that have experienced one of the highest levels of banking internationalization in the world. The foreign-controlled banking asset in these countries ranges from 70 per cent in Poland to almost 100 per cent in Slovakia. With our study we examine the economic determinants of entry into four local banking markets in Central Europe during the period 1994-2004. In addition, we study how the economic determinants affect different entry modes of foreign banks into the Central European markets. Our results show that the most important factors determining foreign bank entry were (i) large potential of the Central European banking markets and low degree of their financial sophistication (ii) the legal origin of the home country, (iii) the size of the economic growth rates differentials between host and home markets, and (iv) finally the distance between the host country and the foreign bank headquarter. We also find that most foreign banks entries occurred in the period of poor creditor rights protection. Moreover, our results present that the economic determinants had an impact on the decision of the organization form of the foreign banks entering the Central European banking markets. Our results are robust to several controls, including the lack of independence of entry decisions.
The determinants of the foreign banks' expansion in South Eastern Europe
ipedr.net
The paper deals with the factors that led to the great penetration of Greek banking sector in South Eastern Europe during 2000-2007. We investigate the validity of the follow the customer hypothesis. Based on the eclectic theory, after controlling for ownership advantages, we found that host country conditions, opportunities in the host financial markets and risk conditions are proved to be significant determinants. Our findings indicate that although follow the customer hypothesis does exist, the utilization of location advantages can better explain Greek banks' expansion.
Foreign bank penetration and bank credit stability in Central and Eastern Europe
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We analyse the development of foreign bank penetration in Central and Eastern Europe (CEE) and its influence on the stability of bank credit. We measure both cross-border credit and activities of foreign bank subsidiaries within CEE. By combining BIS statistics and BankScope data into a unique database we are able to make a clear distinction between these two kinds of activities. Our analysis shows that the relative importance of foreign bank subsidiaries in CEE has increased considerably during recent years. However, in Estonia, Hungary and Poland foreign banks were also important during the first transition years, as they provided substantial amounts of cross-border credit. We do not find evidence of foreign banks deserting CEE, e.g. during adverse economic times. Although cross-border credit did decrease during some periods, our results show that foreign banks acquired new local subsidiaries or expanded the credit supply of existing subsidiaries at the same time.