Determinants of Cross-Border Bank Acquisitions in Transition Economies: A Latent Class Analysis

31 Pages Posted: 27 Aug 2008

See all articles by Tigran Poghosyan

Tigran Poghosyan

International Monetary Fund (IMF)

Jakob de Haan

University of Groningen - Faculty of Economics and Business; CESifo (Center for Economic Studies and Ifo Institute); De Nederlandsche Bank

Date Written: August 2008

Abstract

We analyze the microeconomic determinants of cross-border bank acquisitions in 16 transition economies over the period 1996-2006. By using a latent class discrete choice model we explicitly incorporate the macroeconomic and institutional heterogeneity of the transition economies into our analysis. We find that foreign banks target relatively large and efficient banks when they enter transition economies with weak institutions. This evidence provides support for the market power hypothesis. However, when foreign banks enter more developed transition economies that have made progress in economic reform, they acquire less efficient banks. This result is in line with the efficiency hypothesis.

Keywords: cross-border bank acquisitions, latent class logistic model, transition economies

JEL Classification: G21, G34, E44, F21

Suggested Citation

Poghosyan, Tigran and de Haan, Jakob, Determinants of Cross-Border Bank Acquisitions in Transition Economies: A Latent Class Analysis (August 2008). CESifo Working Paper Series No. 2372, Available at SSRN: https://ssrn.com/abstract=1259643 or http://dx.doi.org/10.2139/ssrn.1259643

Tigran Poghosyan

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Jakob De Haan (Contact Author)

University of Groningen - Faculty of Economics and Business ( email )

PO Box 800
Groningen, 9700 AV
Netherlands
+31 0 50 3633706 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

De Nederlandsche Bank ( email )

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Netherlands

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