Financial Liberalization, Multinational Banks and Credit Supply: The case of Poland
Part of the Polish transformation process has been an opening of the domestic financial market to foreign entrants. While the number of multinational banks (MNBs) has risen from zero to 15 within six years, the ratio of bank credit to private and public enterprises relative to GDP decreased 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, 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 et al., 1996;Weller, 1999).
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 14 (2000)
Issue (Month): 2 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/CIRA20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/CIRA20|
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.:
- 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.
- 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).
- 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.
- 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.
- 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.
- Mark Gertler, 1988.
"Financial structure and aggregate economic activity: an overview,"
Federal Reserve Bank of Cleveland, pages 559-596.
- Gertler, Mark, 1988. "Financial Structure and Aggregate Economic Activity: An Overview," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 20(3), pages 559-588, August.
- Mark L. Gertler, 1988. "Financial Structure and Aggregate Economic Activity: An Overview," NBER Working Papers 2559, National Bureau of Economic Research, Inc.
- Hausman, Jerry A, 1978.
"Specification Tests in Econometrics,"
Econometric Society, vol. 46(6), pages 1251-1271, November.
- 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, 1990. "Macroeconomic Models with Equity and Credit Rationing," NBER Working Papers 3533, National Bureau of Economic Research, Inc.
- 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.
- Weller, Christian E., 1999.
"The finance-investment link in a transition economy: Evidence for Poland from panel data,"
ZEI Working Papers
B 04-1999, University of Bonn, ZEI - Center for European Integration Studies.
- Christian Weller, 2001. "The Finance-Investment Link in a Transition Economy: Evidence For Poland From Panel Data," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 43(1), pages 31-52, April.
- Carlin, Wendy & Mayer, Colin, 1992. "Restructuring Enterprises in Eastern Europe," CEPR Discussion Papers 700, C.E.P.R. Discussion Papers.
- Thomas H. 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.
- Ben Bernanke & Mark Gertler, 1990.
"Financial Fragility and Economic Performance,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 105(1), pages 87-114.
- 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.
When requesting a correction, please mention this item's handle: RePEc:taf:irapec:v:14:y:2000:i:2:p:193-211. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.