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Effects Of Foreign Banks Entry On Bank Performance In The Cee Countries

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  • Janek Uiboupin
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    Abstract

    The purpose of this paper is to estimate empirically the short-term effects of foreign banks entry on bank performance in the Central and Eastern European (CEE) Countries. A sample of 219 banks from ten CEE countries (Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovenia, Slovakia) is used in the analysis. The research results show that foreign banks entry affects negatively domestic banks’ revenues from interest-earning assets, non-interest income, and profitability. Foreign banks entry can also raise the overhead costs of the local banks in short term. The general conclusion is that foreign banks entry is likely to increase competition in the host country.

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    File URL: http://www.mtk.ut.ee/sites/default/files/mtk/RePEc/mtk/febpdf/febawb33.pdf
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    Bibliographic Info

    Paper provided by Faculty of Economics and Business Administration, University of Tartu (Estonia) in its series University of Tartu - Faculty of Economics and Business Administration Working Paper Series with number 33.

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    Length: 44 pages
    Date of creation: 2004
    Date of revision:
    Handle: RePEc:mtk:febawb:33

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    References

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    1. Williams, Barry, 1997. " Positive Theories of Multinational Banking: Eclectic Theory versus Internalisation Theory," Journal of Economic Surveys, Wiley Blackwell, vol. 11(1), pages 71-100, March.
    2. Hasan, Iftekhar & Lozano-Vivas, Ana & Pastor, Jesús T., 2000. "Cross-Border Performance in European Banking," Research Discussion Papers 24/2000, Bank of Finland.
    3. Williams, Barry, 2003. "Domestic and international determinants of bank profits: Foreign banks in Australia," Journal of Banking & Finance, Elsevier, vol. 27(6), pages 1185-1210, June.
    4. Hermes, Niels & Lensink, Robert, 2001. "The impact of foreign bank entry on domestic banking markets: a note," Research Report 01E62, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    5. Levine, Ross, 1996. "Financial development and economic growth : views and agenda," Policy Research Working Paper Series 1678, The World Bank.
    6. Levine, Ross, 2001. "International Financial Liberalization and Economic Growth," Review of International Economics, Wiley Blackwell, vol. 9(4), pages 688-702, November.
    7. King, Robert G. & Levine, Ross, 1993. "Finance and growth : Schumpeter might be right," Policy Research Working Paper Series 1083, The World Bank.
    8. Raghuram G. Rajan & Luigi Zingales, 1996. "Financial Dependence and Growth," NBER Working Papers 5758, National Bureau of Economic Research, Inc.
    9. repec:fth:bfdipa:24/00 is not listed on IDEAS
    10. Unite, Angelo A. & Sullivan, Michael J., 2003. "The effect of foreign entry and ownership structure on the Philippine domestic banking market," Journal of Banking & Finance, Elsevier, vol. 27(12), pages 2323-2345, December.
    11. Lensink, Robert & Hermes, Niels, 2004. "The short-term effects of foreign bank entry on domestic bank behaviour: Does economic development matter?," Journal of Banking & Finance, Elsevier, vol. 28(3), pages 553-568, March.
    12. Glass, Amy Jocelyn & Saggi, Kamal, 1998. "International technology transfer and the technology gap," Journal of Development Economics, Elsevier, vol. 55(2), pages 369-398, April.
    13. King, Robert G. & Levine, Ross, 1993. "Finance and growth : Schumpeter might be right," Policy Research Working Paper Series 1083, The World Bank.
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    Cited by:
    1. Beck, Thorsten & Soledad Martinez Peria, Maria, 2008. "Foreign bank acquisitions and outreach : evidence from Mexico," Policy Research Working Paper Series 4467, The World Bank.
    2. Muhammad AZAM & Sana SIDDIQUI, 2012. "Domestic and Foreign Banks’ Profitability:Differences and Their Determinants," International Journal of Economics and Financial Issues, Econjournals, vol. 2(1), pages 33-40.
    3. repec:onb:oenbwp:y:2007:i:14:b:1 is not listed on IDEAS
    4. Bojana Radovanovic & Dragan Filimonovic, 2011. "Mergers and Acquisitions in Banking Sector: The Case of Western Balkan Countries," Book Chapters, Institute of Economic Sciences.
    5. Cull, Robert & Martinez Peria, Maria Soledad, 2007. "Foreign bank participation and crises in developing countries," Policy Research Working Paper Series 4128, The World Bank.

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