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Foreign Banks and Credit Stability in Central and Eastern Europe: Friends or Foes? A Panel Data Analysis

  • Ralph de Haas
  • Iman van Lelyveld

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://www.dnb.nl/binaries/ms2003-04_tcm46-147334.pdf
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Paper provided by Netherlands Central Bank, Monetary and Economic Policy Department in its series MEB Series (discontinued) with number 2003-04.

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Date of creation: Jun 2003
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Handle: RePEc:dnb:mebser:2003-04
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Web page: http://www.dnb.nl/en/

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  14. Hermes, Niels & Lensink, Robert, 2001. "The impact of foreign bank entry on domestic banking markets: a note," Research Report 01E62, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
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