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Foreign Bank Penetration and Private Sector Credit in Central and Eastern Europe

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Author Info
Ralph de Haas (De Nederlandsche Bank)
Iman van Lelyveld (De Nederlandsche Bank)

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Abstract

We analyse foreign bank penetration in Central and Eastern Europe (CEE)and its influence on private sector credit,taking into account both cross-border credit and credit by foreign bank subsidiaries. By combining BIS and BankScope data into a unique database we make a clear distinction between these credit categories.We show that the relative importance of foreign bank subsidiaries has increased considerably during recent years.However,in Hungary and Poland foreign banks were also important during the first transition years,as they provided substantial amounts of cross-border credit.We do not find evidence of foreign banks deserting CEE during financial crises or economic downturns.Although cross-border credit did decrease during some periods,foreign banks expanded the credit supply of their subsidiaries simultaneously.This may be an important consideration for (transition)countries that still have to decide whether to open up their markets to foreign bank subsidiaries.

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Paper provided by EconWPA in its series International Finance with number 0209002.

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Date of creation: 16 Sep 2002
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Handle: RePEc:wpa:wuwpif:0209002

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Related research
Keywords: foreign banks; cross-border credit; transition economies;

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Find related papers by JEL classification:
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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References listed on IDEAS
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. Claessens, Stijn & Demirguc-Kunt, Asli & Huizinga, Harry, 1998. "How does foreign entry affect the domestic banking market?," Policy Research Working Paper Series 1918, The World Bank. [Downloadable!]
  2. B. Gerard Dages & Linda Goldberg & Daniel Kinney, 2000. "Foreign and domestic bank participation in emerging markets: lessons from Mexico and Argentina," Economic Policy Review, Federal Reserve Bank of New York, issue Sep, pages 17-36. [Downloadable!]
    Other versions:
  3. Peek, Joe & Rosengren, Eric S, 1997. "The International Transmission of Financial Shocks: The Case of Japan," American Economic Review, American Economic Association, vol. 87(4), pages 495-505, September. [Downloadable!] (restricted)
    Other versions:
  4. Schardax, Franz & Reininger, Thomas & Summer, Martin, 2001. "The Financial System in the Czech Republic, Hungary and Poland after a Decade of Transition," Discussion Paper Series 1: Economic Studies 2001,16, Deutsche Bundesbank, Research Centre. [Downloadable!]
  5. Claessens, Stijn & Demirguc-Kunt, Asl[iota] & Huizinga, Harry, 2001. "How does foreign entry affect domestic banking markets?," Journal of Banking & Finance, Elsevier, vol. 25(5), pages 891-911, May. [Downloadable!] (restricted)
  6. McKinnon, Ronald I & Pill, Huw, 1997. "Credible Economic Liberalizations and Overborrowing," American Economic Review, American Economic Association, vol. 87(2), pages 189-93, May. [Downloadable!] (restricted)
  7. Jennifer S. Crystal & B. Gerard Dages & Linda S. Goldberg, 2002. "Has foreign bank entry led to sounder banks in Latin America?," Current Issues in Economics and Finance, Federal Reserve Bank of New York, issue Jan. [Downloadable!]
Full references

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. Bruinshoofd,Allard & Candelon,Bertrand & Raabe,Katharina, 2005. "Banking Sector Strength and the Transmission of Currency Crises," Research Memoranda 023, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization. [Downloadable!]
    Other versions:
  2. R.T.A. de Haas & H.M.M. Peeters, 2004. "Firms' dynamic adjustment to target capital structures in transition economies," WO Research Memoranda (discontinued) 761, Netherlands Central Bank, Research Department. [Downloadable!]
  3. R.T.A. de Haas & H.M.M. Peeters, 2004. "Firms' Dynamic Adjustment to Target Capital Structures in Transition Economies," Finance 0405014, EconWPA. [Downloadable!]
  4. Daniel Gros, 2003. "Who Needs Foreign Banks?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  5. De Haas, Ralph & Naaborg, Ilko, 2006. "Foreign banks in transition countries. To whom do they lend and how are they financed?," MPRA Paper 6320, University Library of Munich, Germany. [Downloadable!]
  6. Ralph de Haas & Ilko Naaborg, 2005. "Does Foreign Bank Entry Reduce Small Firms' Access to Credit? Evidence from European Transition Economies," DNB Working Papers 050, Netherlands Central Bank, Research Department. [Downloadable!]
  7. George Stubos & Ioannis Tsikripis, 2005. "Regional Integration Challenges in South East Europe: Banking Sector Trends," Working Papers 24, Bank of Greece. [Downloadable!]
  8. Andrea M. Maechler & Bas Berend Bakker & Christoph Duenwald & Piritta Sorsa & Andrew Tiffin, 2007. "Vulnerabilities in Emerging Southeastern Europe--How Much Cause for Concern?," IMF Working Papers 07/236, International Monetary Fund. [Downloadable!]
  9. Ralph de Haas & Iman van Lelyveld, 2003. "Foreign Banks and Credit Stability in Central and Eastern Europe: Friends or Foes? A Panel Data Analysis," Research Series Supervision (discontinued) 58, Netherlands Central Bank, Directorate Supervision. [Downloadable!]
    Other versions:
  10. Ralph de Haas & Marga Peeters, 2004. "The Dynamic Adjustment towards Target capital Structures of Firms in," DNB Staff Reports (discontinued) 123, Netherlands Central Bank. [Downloadable!]
  11. Herrero, Alicia Garcia & Martinez Peria, Maria Soledad, 2005. "The mix of international banks'foreign claims : determinants and implications," Policy Research Working Paper Series 3755, The World Bank. [Downloadable!]
    Other versions:
  12. Ralph de Haas, 2006. "Monitoring Costs and Multinational-Bank Lending," DNB Working Papers 088, Netherlands Central Bank, Research Department. [Downloadable!]
  13. Luca Colombo & Gilberto Turati, 2007. "The Role of the Local Business Environment in Banking Consolidation," DISCE - Quaderni dell'Istituto di Economia e Finanza ief0076, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE). [Downloadable!]
  14. Ralph de Haas & Ilko Naaborg, 2005. "Foreign Banks in Transition Economies: Small Business Lending and Internal Capital Markets," International Finance 0504004, EconWPA. [Downloadable!]
  15. Ralph de Haas & Iman van Lelyveld, 2003. "Foreign Banks and Credit Stability in Central and Eastern Europe: A Panel Data Analysis," DNB Staff Reports (discontinued) 109, Netherlands Central Bank. [Downloadable!]
    Other versions:
  16. Burcu Aydin, 2008. "Banking Structure and Credit Growth in Central and Eastern European Countries," IMF Working Papers 08/215, International Monetary Fund. [Downloadable!]
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