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Foreign Banks and Credit Stability in Central and Eastern Europe: Friends or Foes? A Panel Data Analysis

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  • Ralph de Haas
  • Iman van Lelyveld

Abstract

We study whether foreign and domestic banks in Central and Eastern Europe have reacted differently to business cycle conditions and host country banking crises. Our unique panel dataset comprises data of more than 300 banks for the period 1993-2000, with detailed information on bank ownership. Our analysis shows that during crisis periods domestic banks contracted their credit and deposit bases, whereas foreign banks did not. Also, home country conditions matter for foreign bank growth, as there is a significant and negative relationship between home country economic growth and host country credit by foreign banks.

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Bibliographic Info

Paper provided by Netherlands Central Bank, Monetary and Economic Policy Department in its series MEB Series (discontinued) with number 2003-04.

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Date of creation: Jun 2003
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Handle: RePEc:dnb:mebser:2003-04

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Keywords: foreign banks; transition economies; credit growth; financial stability;

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References

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Citations

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Cited by:
  1. Haselmann, Rainer, 2006. "Strategies of foreign banks in transition economies," Emerging Markets Review, Elsevier, vol. 7(4), pages 283-299, December.
  2. Kraft, Evan & Jankov, Ljubinko, 2005. "Does speed kill? Lending booms and their consequences in Croatia," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 105-121, January.
  3. Van Tassel, Eric & Vishwasrao, Sharmila, 2007. "Asymmetric information and the mode of entry in foreign credit markets," Journal of Banking & Finance, Elsevier, vol. 31(12), pages 3742-3760, December.
  4. Clarke, George R.G. & Cull, Robert & Martinez Peria, Maria Soledad, 2006. "Foreign bank participation and access to credit across firms in developing countries," Journal of Comparative Economics, Elsevier, vol. 34(4), pages 774-795, December.
  5. Bank for International Settlements, 2004. "Foreign direct investment in the financial sector of emerging market economies," CGFS Papers, Bank for International Settlements, number 22, January.

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