Credit Institutions, Ownership and Bank Lending in Transition Countries
29 Pages Posted: 12 Apr 2016 Last revised: 13 Apr 2016
Date Written: April 8, 2016
Abstract
The transition of banking in Central and Eastern Europe was nothing short of remarkable. All these countries now have market oriented banking systems that are largely free of government influence. This success is often attributed to the influence of foreign banks that brought modern technology and market based decision making. However, during the crisis foreign banks were a source of the transmission of financial fragility. In this paper we argue that the quality of banking institutions – credit institutions and the legal and regulatory structure – are important determinants of the success of a banking system. In particular, our empirical analysis shows that the crisis shock had a smaller impact on loan growth in countries with credit registers or bureaus for the recording of loans.
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