Financial liberalization, multinational banks and credit supply: The case of Poland
AbstractPart of the Polish transformation process has been an opening of the domestic financial market to foreign entrants. While the number of MNBs rises from zero to fifteen within six years, the ratio of bank credit to private and public enterprises relative to GDP decreases continuously after 1991. In this paper, I develop an argument as to why these two trends may be connected. Further, using monthly data provided by the weekly Polish publication Gazeta Bankowa, by the National Bank of Poland, the Central Statistical Office, the BIS, and the IMF, I test the hypothesis that more MNB entry may lead to a declining credit supply during the early stages of the transition process. Multivariate regression results indicate that more MNB entry results in a lower credit supply by Polish banks during the early transition phase. This result holds regardless of the measurement of international financial competition, and regardless of a bank’s history, and it is only partially affected by a bank’s location. More importantly, the overall impact of increased international financial competition on the credit supply of Polish banks is strong enough to lower the total credit supply in the Polish economy. Since an earlier study has found that Polish industries operate under hard budget constraints and are finance constrained during the early stages of the transition process, a reduction in the credit supply has adverse effects on business investments (Cornelli, Portes, and Schaffer, 1996; Weller, 1999). --
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by ZEI - Center for European Integration Studies, University of Bonn in its series ZEI Working Papers with number B 10-1999.
Date of creation: 1999
Date of revision:
Multinational banks; credit supply; financial liberalization; transition economy; Poland;
Other versions of this item:
- Christian Weller, 2000. "Financial Liberalization, Multinational Banks and Credit Supply: The case of Poland," International Review of Applied Economics, Taylor & Francis Journals, vol. 14(2), pages 193-211.
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
- O52 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Europe
- P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
- P33 - Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid
- P34 - Economic Systems - - Socialist Institutions and Their Transitions - - - Finance
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.:
- J. A. Hausman, 1976.
"Specification Tests in Econometrics,"
185, Massachusetts Institute of Technology (MIT), Department of Economics.
- Gertler, Mark, 1988.
"Financial Structure and Aggregate Economic Activity: An Overview,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 20(3), pages 559-88, August.
- Mark Gertler, 1988. "Financial structure and aggregate economic activity: an overview," Proceedings, Federal Reserve Bank of Cleveland, pages 559-596.
- Mark L. Gertler, 1988. "Financial Structure and Aggregate Economic Activity: An Overview," NBER Working Papers 2559, National Bureau of Economic Research, Inc.
- Corbett, Jennifer & Mayer, Colin, 1991.
"Financial Reform in Eastern Europe: Progress With the Wrong Model,"
CEPR Discussion Papers
603, C.E.P.R. Discussion Papers.
- Corbett, Jenny & Mayer, Colin, 1991. "Financial Reform in Eastern Europe: Progress with the Wrong Model," Oxford Review of Economic Policy, Oxford University Press, vol. 7(4), pages 57-75, Winter.
- Begg, David & Portes, Richard, 1992.
"Enterprise Debt and Economic Transformation: Financial Restructuring of the State Sector in Central and Eastern Europe,"
CEPR Discussion Papers
695, C.E.P.R. Discussion Papers.
- David Begg & Richard Portes, 1993. "Enterprise debt and economic transformation (Financial restructuring of the state sector in Central and Eastern Europe)," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 1(1), pages 116-117, 01.
- Christian Weller, 2001.
"The Finance-Investment Link in a Transition Economy: Evidence For Poland From Panel Data,"
Comparative Economic Studies,
Palgrave Macmillan, vol. 43(1), pages 31-52, April.
- Weller, Christian E., 1999. "The finance-investment link in a transition economy: Evidence for Poland from panel data," ZEI Working Papers B 04-1999, ZEI - Center for European Integration Studies, University of Bonn.
- Ben Bernanke & Mark Gertler, 1987.
"Financial Fragility and Economic Performance,"
NBER Working Papers
2318, National Bureau of Economic Research, Inc.
- Bruce C. Greenwald & Joseph E. Stiglitz, 1990.
"Macroeconomic Models with Equity and Credit Rationing,"
in: Asymmetric Information, Corporate Finance, and Investment, pages 15-42
National Bureau of Economic Research, Inc.
- Bruce C. Greenwald & Joseph E. Stiglitz & Andrew Weiss, 1989. "Macroeconomic models with equity and credit rationing," Proceedings, Federal Reserve Bank of San Francisco.
- Bruce C. Greenwald & Joseph E. Stiglitz, 1992. "Macroeconomic Models with Equity and Credit Rationing," NBER Working Papers 3533, National Bureau of Economic Research, Inc.
- Brainard, Lawrence J., 1990. "Capital markets in Korea and Taiwan: Emerging opportunities for foreign banks," Journal of Asian Economics, Elsevier, vol. 1(1), pages 173-177.
- Thomas S. Mondschean & Timothy P. Opiela, 1997. "Banking reform in a transition economy: the case of Poland," Economic Perspectives, Federal Reserve Bank of Chicago, issue Mar, pages 16-32.
- Cornelli, Francesca & Portes, Richard & Schaffer, Mark E, 1996.
"The Capital Structure of Firms in Central and Eastern Europe,"
CEPR Discussion Papers
1392, C.E.P.R. Discussion Papers.
- Cornelli, F. & Portes, R. & Schaffer, M., 1996. "The Capital Structure of Firms in Central and Eastern Europe," DELTA Working Papers 96-05, DELTA (Ecole normale supérieure).
- Ursacki, Terry & Vertinsky, Ilan, 1992. "Choice of entry timing and scale by foreign banks in Japan and Korea," Journal of Banking & Finance, Elsevier, vol. 16(2), pages 405-421, April.
- Carlin, Wendy & Mayer, Colin, 1992. "Restructuring Enterprises in Eastern Europe," CEPR Discussion Papers 700, C.E.P.R. Discussion Papers.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- Santonu Basu, 2006. "Structural Problems in Financing Development: Issues Relating to India," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(1), pages 85-101.
- Weller, Christian E. & Scher, Mark J., 1999. "Multinational banks and development finance," ZEI Working Papers B 16-1999, ZEI - Center for European Integration Studies, University of Bonn.
- Mejra Festić, 2011. "The role of the foreign banks in the 5 EU member states," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 13(1), pages 189-206, June.
- Chantapong, Saovanee & Menkhoff, Lukas, 2005. "Cost Efficiency of Domestic and Foreign Banks in Thailand: Evidence from Panel Data," Proceedings of the German Development Economics Conference, Kiel 2005 9, Verein für Socialpolitik, Research Committee Development Economics.
- Weller, Christian E. & von Hagen, Jürgen, 1999. "Financial fragility or what went right and what could go wrong in central European banking?," ZEI Working Papers B 13-1999, ZEI - Center for European Integration Studies, University of Bonn.
- Saovanee Chantapong, 2005. "Comparative Study of Domestic and Foreign Bank Performance in Thailand: The Regression Analysis," Economic Change and Restructuring, Springer, vol. 38(1), pages 63-83, 03.
- Christian E. Weller & Ghazal Zulfiqar, 2013. "Financial Market Diversity and Macroeconomic Stability," Working Papers wp332, Political Economy Research Institute, University of Massachusetts at Amherst.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).
If references are entirely missing, you can add them using this form.