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Banks’ Vulnerability and Financial Openness across Central and Eastern Europe

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  • Nistor Simona

    (Babeş-Bolyai University, Cluj Napoca, Romania)

Abstract

This paper investigates the impact of the degree of capital account openness on banks’ exposure to extreme events during the period 2005-2012 using a sample of financial institutions from Central and Eastern Europe. The empirical output highlights a positive and strongly significant impact of a higher degree of financial openness on banks’ systemic vulnerability. Robust findings suggest that this harmful effect is lower for foreign owned banks or for those whose bank holding company signed one or more Vienna Initiative commitment letters. On the other side, tighter capital regulations and private monitoring policies enhance the positive impact of a higher degree of capital accounts openness on banks’ vulnerability to systemic events.

Suggested Citation

  • Nistor Simona, 2017. "Banks’ Vulnerability and Financial Openness across Central and Eastern Europe," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 62(3), pages 47-66, December.
    • Handle: RePEc:vrs:subboe:v:62:y:2017:i:3:p:47-66:n:3
    DOI: 10.1515/subboec-2017-0013
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    More about this item

    Keywords

    banks’ systemic vulnerability; financial openness; capital regulations;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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