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How Important are Foreign Banks in the Financial Development of European Transition Countries?

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  • Ilko Naaborg
  • Bert Scholtens
  • Jakob de Haan
  • Hanneke Bol
  • Ralph de Haas

Abstract

This paper analyzes the development of the banking sector in European transition countries. We find that, although bank assets increased during the 1990s, credit to the private sector remained relatively low. Foreign-owned banks have become major players in the financial system of these countries. However, foreign bank presence and financial development in general vary considerably among the transition economies. Foreign-owned banks have, in general, higher profitability levels than domestic banks. Furthermore, it appears that foreign and domestic bank performance tend to converge.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1100.

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Date of creation: 2003
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Handle: RePEc:ces:ceswps:_1100

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Keywords: financial development; financial institutions; foreign bank entry; transition economies; bank performance;

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References

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Citations

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Cited by:
  1. Manlagñit, Maria Chelo V., 2011. "The economic effects of foreign bank presence: Evidence from the Philippines," Journal of International Money and Finance, Elsevier, Elsevier, vol. 30(6), pages 1180-1194, October.
  2. Eller, Markus & Haiss, Peter & Steiner, Katharina, 2006. "Foreign direct investment in the financial sector and economic growth in Central and Eastern Europe: The crucial role of the efficiency channel," Emerging Markets Review, Elsevier, Elsevier, vol. 7(4), pages 300-319, December.
  3. DeLisle Worrell & Andrea M. Maechler & Srobona Mitra, 2007. "Decomposing Financial Risks and Vulnerabilities in Eastern Europe," IMF Working Papers 07/248, International Monetary Fund.
  4. Tasic, Nikola & Valev, Neven, 2010. "The provision of long-term financing in the transition economies," Journal of Comparative Economics, Elsevier, vol. 38(2), pages 160-172, June.
  5. Jie Mao & Ben Li, 2009. "The effect of potential foreign entry in the banking sector," Economics Bulletin, AccessEcon, vol. 29(1), pages 141-149.
  6. Andrea M Maechler & Srobona Mitra & Delisle Worrell, 2010. "Decomposing Financial Risks and Vulnerabilities in Emerging Europe," IMF Staff Papers, Palgrave Macmillan, vol. 57(1), pages 25-60, April.
  7. Hartwell , Christopher A., 2014. "The impact of institutional volatility on financial volatility in transition economies: a GARCH family approach," BOFIT Discussion Papers, Bank of Finland, Institute for Economies in Transition 6/2014, Bank of Finland, Institute for Economies in Transition.
  8. Aysan, Ahmet Faruk & Ceyhan, Sanli Pinar, 2008. "Structural Change and the Efficiency of Banking In Turkey: Does Ownership Matter?," MPRA Paper 17849, University Library of Munich, Germany.
  9. Giannetti, Mariassunta & Ongena, Steven, 2005. "Financial integration and entrepreneurial activity: evidence from foreign bank entry in emerging markets," Working Paper Series, European Central Bank 0498, European Central Bank.
  10. Ahmet Faruk Aysan & Sanli Pinar Ceyhan, 2007. "Market Disciplining Role of Crises on The Restructuring of the Turkish Banking Sector," Working Papers, Bogazici University, Department of Economics 2007/18, Bogazici University, Department of Economics.

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