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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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File URL: http://128.118.178.162/eps/if/papers/0305/0305001.pdf
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Bibliographic Info

Paper provided by EconWPA in its series International Finance with number 0305001.

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Date of creation: 30 May 2003
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Handle: RePEc:wpa:wuwpif:0305001

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Web page: http://128.118.178.162

Related research

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

Other versions of this item:

Find related papers by JEL classification:

• C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
• F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
• G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
• P34 - Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

This paper has been announced in the following NEP Reports:

• NEP-ALL-2003-06-04 (All new papers)
• NEP-EEC-2003-06-04 (European Economics)
• NEP-MFD-2003-06-04 (Microfinance)

References

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20. 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.

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Citations

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Cited by:

1. Bank for International Settlements, 2004. "Foreign direct investment in the financial sector of emerging market economies," CGFS Papers, Bank for International Settlements, number 22.
2. 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.
   
   • Eric Van Tassel & Sharmila Vishwasrao, 2006. "Asymmetric Information and the Mode of Entry In Foreign Credit Markets," Working Papers 06002, Department of Economics, College of Business, Florida Atlantic University.
3. 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.
4. 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.
5. Haselmann, Rainer, 2006. "Strategies of foreign banks in transition economies," Emerging Markets Review, Elsevier, vol. 7(4), pages 283-299, December.

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