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Does Foreign Bank Entry Reduce Small Firms' Access to Credit? Evidence from European Transition Economies

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Author Info
Ralph de Haas
Ilko Naaborg

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Abstract

On the basis of focused interviews with managers of foreign parent banks and their affiliates in Central Europe and the Baltic States, the development of small-business lending by foreign banks is analysed. Our approach allows us to complement the standard empirical literature, which has difficulty in analysing qualitative issues such as the role of changing lending technologies. It is found that the acquisition of local banks by foreign banks has not led to a persistent bias in these banks' credit supply towards large multinational corporations. Instead, increased competition and the improvement of subsidiaries' lending technologies have led foreign banks to gradually expand into the SME and retail markets.

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Paper provided by Netherlands Central Bank, Research Department in its series DNB Working Papers with number 050.

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Date of creation: Aug 2005
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Handle: RePEc:dnb:dnbwpp:050

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Keywords: foreign banks transition economies small-business lending

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Find related papers by JEL classification:
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages

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  2. Berger, Allen N. & Klapper, Leora F. & Udell, Gregory F., 2001. "The ability of banks to lend to informationally opaque small businesses," Journal of Banking & Finance, Elsevier, vol. 25(12), pages 2127-2167, December. [Downloadable!] (restricted)
    Other versions:
  3. Allen N. Berger & Anthony Saunders & Joseph M. Scalise & Gregory F. Udell, 1998. "The Effects of Bank Mergers and Acquisitions on Small Business Lending," New York University, Leonard N. Stern School Finance Department Working Paper Seires 98-007, New York University, Leonard N. Stern School of Business-.
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  4. Majnoni, Giovanni & Shankar, Rashmi & Varhegyi, Eva, 2003. "The dynamics of foreign bank ownership - evidence from Hungary," Policy Research Working Paper Series 3114, The World Bank. [Downloadable!]
  5. Mauro F. Guillén & Adrian E. Tschoegl, 1999. "At Last the Internationalization of Retail Banking? The Case of the Spanish Banks in Latin America," Center for Financial Institutions Working Papers 99-41, Wharton School Center for Financial Institutions, University of Pennsylvania. [Downloadable!]
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  8. Clarke, George & Cull, Robert & Martinez Peria, Maria Soledad & Sanchez, Susana M., 2001. "Foreign bank entry - experience, implications for developing countries, and agenda for further research," Policy Research Working Paper Series 2698, The World Bank. [Downloadable!]
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  10. Adrian E Tschoegl, 1987. "International Retail Banking as a Strategy: An Assessment," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 18(2), pages 67-88, June. [Downloadable!] (restricted)
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  14. Collender, Robert N. & Shaffer, Sherrill, 2003. "Local bank office ownership, deposit control, market structure, and economic growth," Journal of Banking & Finance, Elsevier, vol. 27(1), pages 27-57, January. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Claeys, Sophie & Hainz, Christa, 2007. "Acquisition versus greenfield: The impact of the mode of foreign bank entry on information and bank lending rates," Working Paper Series 210, Sveriges Riksbank (Central Bank of Sweden). [Downloadable!]
    Other versions:
  2. Ralph de Haas, 2006. "Monitoring Costs and Multinational-Bank Lending," DNB Working Papers 088, Netherlands Central Bank, Research Department. [Downloadable!]
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