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

Author

Listed:
  • R. T.A. de Haas

    (Monetary and Economic Policy Department, De Nederlandsche Bank, r.t.a.de.haas@dnb.nl)

  • I. P.P van Lelyveld

    (Supervisory Policy Division, De Nederlandsche Bank, P.O. Box 98, 1000 AB, Amsterdam, The Netherlands)

Abstract

In this article, we analyse foreign bank penetration in Central and Eastern Europe (CEE) and its influence on private sector credit. By combining BIS data and BankScope data into a unique database we make a clear distinction between cross-border credit and credit by foreign bank subsidiaries. We show that the relative importance of foreign bank subsidiaries has increased considerably during recent years. 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.

Suggested Citation

  • R. T.A. de Haas & I. P.P van Lelyveld, 2004. "Foreign Bank Penetration and Private Sector Credit in Central and Eastern Europe," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 3(2), pages 125-151, August.
  • Handle: RePEc:sae:emffin:v:3:y:2004:i:2:p:125-151
    DOI: 10.1177/097265270400300203
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    References listed on IDEAS

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    More about this item

    Keywords

    Foreign banks; cross-border credit; financial stability; transition economies;
    All these keywords.

    JEL classification:

    • 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

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