Foreign Banks in Eastern Europe: Mode of Entry and Effects on Bank Interest Rates
Credit markets in many Eastern European countries are now dominated by foreign-owned banks. We analyze the development for foreign ownership and its impact on lending rate in ten Eastern European countries between 1995 and 2003. Currently, the majority of loans from foreign banks is granted by acquired banks. The presence of foreign acquired banks as measured by their relative number among the banks in our dataset increased somewhat slower than that of foreign de novo banks. However, since market entry through acquisition allows acquiring a credit portfolio and a customer base, acquired banks were able to expand their market share much faster than the foreign de novo banks. Our results also show that the interest rate decreased after foreign bank entry. Moreover, while the reduction in interest rates of domestic banks is more pronounced in the case of foreign entry through a de novo investment, foreign de novo banks charge higher interest rates than foreign acquired banks.
|Date of creation:||Feb 2006|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.sfbtr15.de/
More information through EDIRC
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.:
- Giannetti, Mariassunta & Ongena, Steven, 2005.
"Financial integration and entrepreneurial activity: evidence from foreign bank entry in emerging markets,"
Working Paper Series
0498, European Central Bank.
- Giannetti, Mariassunta & Ongena, Steven, 2005. "Financial Integration and Entrepreneurial Activity: Evidence from Foreign Bank Entry in Emerging Markets," CEPR Discussion Papers 5151, C.E.P.R. Discussion Papers.
- Maria Soledad Martinez Peria & Ashoka Mody, 2004.
"How foreign participation and market concentration impact bank spreads: evidence from Latin America,"
Federal Reserve Bank of Cleveland, pages 511-542.
- Martinez Peria, Maria Soledad & Mody, Ashoka, 2004. "How Foreign Participation and Market Concentration Impact Bank Spreads: Evidence from Latin America," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(3), pages 511-37, June.
- Martinez Peria, Maria Soledad & Mody, Ashoka, 2004. "How foreign participation and market concentration impact bank spreads : evidence from Latin America," Policy Research Working Paper Series 3210, The World Bank.
- Demirguc-Kunt, Asli & Huizinga, Harry, 1998.
"Determinants of commercial bank interest margins and profitability : some international evidence,"
Policy Research Working Paper Series
1900, The World Bank.
- Demirguc, Asli & Huizinga, Harry, 1999. "Determinants of Commercial Bank Interest Margins and Profitability: Some International Evidence," World Bank Economic Review, World Bank Group, vol. 13(2), pages 379-408, May.
- Bonin, John & Hasan, Iftekhar & Wachtel , Paul, 2014.
"Banking in transition countries,"
BOFIT Discussion Papers
8/2014, Bank of Finland, Institute for Economies in Transition.
- John Bonin & Iftekhar Hasan & Paul Wachtel, 2013. "Banking in Transition Countries," Wesleyan Economics Working Papers 2013-008, Wesleyan University, Department of Economics.
- Bonin, John & Hasan, Iftekhar & Wachtel, Paul, 2008. "Banking in transition countries," BOFIT Discussion Papers 12/2008, Bank of Finland, Institute for Economies in Transition.
- Claessens, Stijn & Demirguc-Kunt, Asl[iota] & Huizinga, Harry, 2001. "How does foreign entry affect domestic banking markets?," Journal of Banking & Finance, Elsevier, vol. 25(5), pages 891-911, May.
- Majnoni, Giovanni & Shankar, Rashmi & Varhegyi, Eva, 2003. "The dynamics of foreign bank ownership - evidence from Hungary," Policy Research Working Paper Series 3114, The World Bank.
When requesting a correction, please mention this item's handle: RePEc:trf:wpaper:95. 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: (Alexandra Frank)
If references are entirely missing, you can add them using this form.