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Foreign Banks in Central Eastern Europe: Impact of Foreign Governance on Bank Performance

In: Bank Performance, Risk and Firm Financing

Author

Listed:
  • Ewa Miklaszewska
  • Katarzyna Mikolajczyk

Abstract

This research belongs to a vast body of literature analysing the impact of foreign capital on the bank performance of Eastern European countries. This topic has attracted considerable attention in the past, with most studies in the literature stressing the positive consequences of foreign capital for bank efficiency and overall market competitiveness. Our aim, however, is to look beyond short-term impact on profitability and instead carry out research into a broader question, namely: has foreign capital brought more fundamental, long-term changes to Eastern European banking markets through its use of different strategies, business models and corporate governance principles, imported from the home countries of foreign owners? A related question is whether the type of entry matters, as foreign banks differ in the way they entered the so-called emerging markets, opting either for a model of limited presence in many countries (wholly controlled subsidiary model) or for a strong retail presence in selected countries (majority shareholder model). The former’s advantage over competitors is its decisiveness and technological superiority: ability to act quickly and build strategy around transfer of technology and managerial skills across borders. The latter’s strong points are local flexibility, better customer relationship and longer time frame for strategic decisions.

Suggested Citation

  • Ewa Miklaszewska & Katarzyna Mikolajczyk, 2011. "Foreign Banks in Central Eastern Europe: Impact of Foreign Governance on Bank Performance," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Philip Molyneux (ed.), Bank Performance, Risk and Firm Financing, chapter 3, pages 55-82, Palgrave Macmillan.
  • Handle: RePEc:pal:pmschp:978-0-230-31387-3_4
    DOI: 10.1057/9780230313873_4
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    Cited by:

    1. K. Batu Tunaya & Serhat Yüksel, 2017. "The relationship between corporate governance andforeign ownership of the banks in developing countries," Contaduría y Administración, Accounting and Management, vol. 62(5), pages 25-26, Diciembre.

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