IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-03201979.html
   My bibliography  Save this paper

Foreign bank entry, credit allocation and lending rates in emerging markets: Empirical evidence from Poland

Author

Listed:
  • Hans Degryse

    (K.U. LEUVEN - KU Leuven - Catholic University of Leuven = Katholieke Universiteit Leuven)

  • Olena Havrylchyk

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Emilia Jurzyk
  • Sylwester Kozak

Abstract

Earlier studies have documented that foreign banks charge lower lending rates and interest spreads than domestic banks. We hypothesize that this may stem from the superior efficiency of foreign entrants that they decide to pass onto borrowers (“performance hypothesis”), but could also reflect a different loan allocation with respect to borrower transparency, loan maturity and currency (“portfolio composition hypothesis”). We are able to differentiate between the above hypotheses thanks to a novel dataset containing detailed bank-specific information for the Polish banking industry. Our findings demonstrate that banks differ significantly in terms of portfolio composition and we attest to the “portfolio composition hypothesis” by showing that, having controlled for portfolio composition, there are no differences in lending rates between banks.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Hans Degryse & Olena Havrylchyk & Emilia Jurzyk & Sylwester Kozak, 2012. "Foreign bank entry, credit allocation and lending rates in emerging markets: Empirical evidence from Poland," Post-Print hal-03201979, HAL.
    • Handle: RePEc:hal:journl:hal-03201979
    DOI: 10.1016/j.jbankfin.2011.12.006
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jean Helwege & Christopher M. Turner, 1999. "The Slope of the Credit Yield Curve for Speculative‐Grade Issuers," Journal of Finance, American Finance Association, vol. 54(5), pages 1869-1884, October.
    2. Berger, Allen N. & Klapper, Leora F. & Udell, Gregory F., 2001. "The ability of banks to lend to informationally opaque small businesses," Journal of Banking & Finance, Elsevier, vol. 25(12), pages 2127-2167, December.
    3. de la Torre, Augusto & Martínez Pería, María Soledad & Schmukler, Sergio L., 2010. "Bank involvement with SMEs: Beyond relationship lending," Journal of Banking & Finance, Elsevier, vol. 34(9), pages 2280-2293, September.
    4. Sengupta, Rajdeep, 2007. "Foreign entry and bank competition," Journal of Financial Economics, Elsevier, vol. 84(2), pages 502-528, May.
    5. Popov, Alexander & Udell, Gregory F., 2010. "Cross-border banking and the international transmission of financial distress during the crisis of 2007-2008," Working Paper Series 1203, European Central Bank.
    6. Giannetti, Mariassunta & Ongena, Steven, 2012. "“Lending by example”: Direct and indirect effects of foreign banks in emerging markets," Journal of International Economics, Elsevier, vol. 86(1), pages 167-180.
    7. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-1398, November.
    8. Laurent Weill, 2003. "Banking efficiency in transition economies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(3), pages 569-592, September.
    9. Berger, Allen N. & Miller, Nathan H. & Petersen, Mitchell A. & Rajan, Raghuram G. & Stein, Jeremy C., 2005. "Does function follow organizational form? Evidence from the lending practices of large and small banks," Journal of Financial Economics, Elsevier, vol. 76(2), pages 237-269, May.
    10. Berger, Allen N. & Udell, Gregory F., 2006. "A more complete conceptual framework for SME finance," Journal of Banking & Finance, Elsevier, vol. 30(11), pages 2945-2966, November.
    11. De Haas, Ralph & Naaborg, Ilko, 2006. "Foreign banks in transition countries. To whom do they lend and how are they financed?," MPRA Paper 6320, University Library of Munich, Germany.
    12. Michael P. Dooley & Inseok Shin, 1999. "Private inflows when crises are anticipated: a case study of Korea," Proceedings, Federal Reserve Bank of San Francisco, issue Sep.
    13. Clarke, George & Cull, Robert & Martinez Peria, Maria Soledad & Sanchez, Susana M, 2005. "Bank Lending to Small Businesses in Latin America: Does Bank Origin Matter?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(1), pages 83-118, February.
    14. Brown, M. & Ongena, S. & Yesin, P., 2008. "Currency Denomination of Bank Loans : Evidence from Small Firms in Transition Countries," Discussion Paper 2008-16, Tilburg University, Center for Economic Research.
    15. Claeys, Sophie & Hainz, Christa, 2006. "Acquisition versus greenfield: The impact of the mode of foreign bank entry on information and bank lending rates," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 182, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    16. Berger, Allen N. & Saunders, Anthony & Scalise, Joseph M. & Udell, Gregory F., 1998. "The effects of bank mergers and acquisitions on small business lending," Journal of Financial Economics, Elsevier, vol. 50(2), pages 187-229, November.
    17. Mitchell A. Petersen & Raghuram G. Rajan, 2002. "Does Distance Still Matter? The Information Revolution in Small Business Lending," Journal of Finance, American Finance Association, vol. 57(6), pages 2533-2570, December.
    18. Plümper, Thomas & Troeger, Vera E., 2007. "Efficient Estimation of Time-Invariant and Rarely Changing Variables in Finite Sample Panel Analyses with Unit Fixed Effects," Political Analysis, Cambridge University Press, vol. 15(2), pages 124-139, April.
    19. Clarke, George R.G. & Cull, Robert & Martinez Peria, Maria Soledad, 2006. "Foreign bank participation and access to credit across firms in developing countries," Journal of Comparative Economics, Elsevier, vol. 34(4), pages 774-795, December.
    20. Takeshi Koyama & Stephen S. Golub, 2006. "OECD's FDI Regulatory Restrictiveness Index: Revision and Extension to more Economies," OECD Working Papers on International Investment 2006/4, OECD Publishing.
    21. Althammer, Wilhelm & Haselmann, Rainer, 2011. "Explaining foreign bank entrance in emerging markets," Journal of Comparative Economics, Elsevier, vol. 39(4), pages 486-498.
    22. Olena Havrylchyk & Emilia Jurzyk, 2011. "Profitability of foreign banks in Central and Eastern Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 19(3), pages 443-472, July.
    23. Bonin, John P. & Hasan, Iftekhar & Wachtel, Paul, 2005. "Bank performance, efficiency and ownership in transition countries," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 31-53, January.
    24. Ashoka Mody & Maria Soledad Martinez Peria, 2004. "How foreign participation and market concentration impact bank spreads: evidence from Latin America," Proceedings, Federal Reserve Bank of Cleveland, pages 511-542.
    25. Jeremy C. Stein, 2002. "Information Production and Capital Allocation: Decentralized versus Hierarchical Firms," Journal of Finance, American Finance Association, vol. 57(5), pages 1891-1921, October.
    26. Allen N. Berger & Robert DeYoung & Hesna Genay & Gregory F. Udell, 1999. "Globalization of financial institutions: evidence from cross-border banking performance," Working Paper Series WP-99-25, Federal Reserve Bank of Chicago.
    27. Enrica Detragiache & Thierry Tressel & Poonam Gupta, 2008. "Foreign Banks in Poor Countries: Theory and Evidence," Journal of Finance, American Finance Association, vol. 63(5), pages 2123-2160, October.
    28. Chen, Sheng-Hung & Liao, Chien-Chang, 2011. "Are foreign banks more profitable than domestic banks? Home- and host-country effects of banking market structure, governance, and supervision," Journal of Banking & Finance, Elsevier, vol. 35(4), pages 819-839, April.
    29. Atif Mian, 2006. "Distance Constraints: The Limits of Foreign Lending in Poor Economies," Journal of Finance, American Finance Association, vol. 61(3), pages 1465-1505, June.
    30. Aron A. Gottesman & Gordon S. Roberts, 2004. "Maturity and Corporate Loan Pricing," The Financial Review, Eastern Finance Association, vol. 39(1), pages 55-77, February.
    31. Beer, Christian & Ongena, Steven & Peter, Marcel, 2010. "Borrowing in foreign currency: Austrian households as carry traders," Journal of Banking & Finance, Elsevier, vol. 34(9), pages 2198-2211, September.
    32. Gormley, Todd A., 2010. "The impact of foreign bank entry in emerging markets: Evidence from India," Journal of Financial Intermediation, Elsevier, vol. 19(1), pages 26-51, January.
    33. Christa Hainz, 2005. "Effects of bank insolvency on corporate incentives in transition economies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 13(2), pages 261-286, April.
    34. Mariassunta Giannetti & Steven Ongena, 2009. "Financial Integration and Firm Performance: Evidence from Foreign Bank Entry in Emerging Markets," Review of Finance, European Finance Association, vol. 13(2), pages 181-223.
    35. International Monetary Fund, 2007. "Vulnerabilities in Emerging Southeastern Europe—How Much Cause for Concern?," IMF Working Papers 2007/236, International Monetary Fund.
    36. Dell'Ariccia, Giovanni & Marquez, Robert, 2004. "Information and bank credit allocation," Journal of Financial Economics, Elsevier, vol. 72(1), pages 185-214, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Degryse, H.A. & Havrylchyk, O. & Jurzyk, E. & Kozak, S., 2009. "Foreign Bank Entry and Credit Allocation in Emerging Markets," Other publications TiSEM fa54a876-1262-44c9-8099-7, Tilburg University, School of Economics and Management.
    2. Boustanifar, Hamid, 2014. "Information acquisition, foreign bank entry, and credit allocation," The Quarterly Review of Economics and Finance, Elsevier, vol. 54(3), pages 324-336.
    3. Theodora Bermpei & Antonios Nikolaos Kalyvas & Lorenzo Neri & Antonella Russo, 2019. "Will Strangers Help you Enter? The Effect of Foreign Bank Presence on New Firm Entry," Journal of Financial Services Research, Springer;Western Finance Association, vol. 56(1), pages 1-38, August.
    4. Olena Havrylchyk, 2010. "Foreign Bank Presence and its Effect on Firm Entry and Exit in Transition Economies," Working Papers 2010-10, CEPII research center.
    5. Havrylchyk, Olena, 2012. "The effect of foreign bank presence on firm entry and exit in transition economies," Journal of Banking & Finance, Elsevier, vol. 36(6), pages 1710-1721.
    6. repec:diw:diwfin:diwfin05020 is not listed on IDEAS
    7. Kalyvas, Antonios Nikolaos & Mamatzakis, Emmanuel, 2017. "Do creditor rights and information sharing affect the performance of foreign banks?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 50(C), pages 13-35.
    8. Thorsten Beck & Vasso Ioannidou & Larissa Schäfer, 2018. "Foreigners vs. Natives: Bank Lending Technologies and Loan Pricing," Management Science, INFORMS, vol. 64(8), pages 3792-3820, August.
    9. repec:zbw:bofitp:2011_011 is not listed on IDEAS
    10. Havrylchyk, Olena, 2012. "The effect of foreign bank presence on firm entry and exit in transition economies," Journal of Banking & Finance, Elsevier, vol. 36(6), pages 1710-1721.
    11. De Haas, Ralph & Ferreira, Daniel & Taci, Anita, 2010. "What determines the composition of banks' loan portfolios? Evidence from transition countries," Journal of Banking & Finance, Elsevier, vol. 34(2), pages 388-398, February.
    12. Manthos D. Delis & Sotirios Kokas & Steven Ongena, 2016. "Foreign Ownership and Market Power in Banking: Evidence from a World Sample," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 48(2-3), pages 449-483, March.
    13. Ongena, S. & Popov, A. & Udell, G.F., 2011. "Bank Risk-Taking Abroad : Does Home-Country Regulation and Supervision Matter," Other publications TiSEM 5396c9d5-242f-4681-b8b9-5, Tilburg University, School of Economics and Management.
    14. Leslie Sheng Shen, 2021. "Global Banking and Firm Financing: A Double Adverse Selection Channel of International Transmission," International Finance Discussion Papers 1325, Board of Governors of the Federal Reserve System (U.S.).
    15. Gormley, Todd A., 2010. "The impact of foreign bank entry in emerging markets: Evidence from India," Journal of Financial Intermediation, Elsevier, vol. 19(1), pages 26-51, January.
    16. Gormley, Todd A., 2014. "Costly information, entry, and credit access," Journal of Economic Theory, Elsevier, vol. 154(C), pages 633-667.
    17. Beck, Thorsten & Martinez Peria, Maria Soledad, 2010. "Foreign bank participation and outreach: Evidence from Mexico," Journal of Financial Intermediation, Elsevier, vol. 19(1), pages 52-73, January.
    18. Ririen Setiati Riyanti & Iván Arribas & Silvia Pazzi & Emili Tortosa-Ausina, 2022. "The impacts of static ownership types and governance changes on small business lending: Evidence from Indonesia," Working Papers 2022/13, Economics Department, Universitat Jaume I, Castellón (Spain).
    19. Stijn Claessens, 2006. "Competitive Implications of Cross-Border Banking," World Scientific Book Chapters, in: Gerard Caprio Jr & Douglas D Evanoff & George G Kaufman (ed.), Cross-Border Banking Regulatory Challenges, chapter 11, pages 151-181, World Scientific Publishing Co. Pte. Ltd..
    20. Todd A. Gormley & Bong Hwan Kim & Xiumin Martin, 2012. "Do Firms Adjust Their Timely Loss Recognition in Response to Changes in the Banking Industry?," Journal of Accounting Research, Wiley Blackwell, vol. 50(1), pages 159-196, March.
    21. Luca Papi & Emma Sarno & Alberto Zazzaro, 2017. "The geographical network of bank organizations: issues and evidence for Italy," Chapters, in: Ron Martin & Jane Pollard (ed.), Handbook on the Geographies of Money and Finance, chapter 8, pages 156-196, Edward Elgar Publishing.
    22. Giannetti, Mariassunta & Ongena, Steven, 2012. "“Lending by example”: Direct and indirect effects of foreign banks in emerging markets," Journal of International Economics, Elsevier, vol. 86(1), pages 167-180.

    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-03201979. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.