How Important are Foreign Banks in the Financial Development of European Transition Countries?

35 Pages Posted: 28 Jan 2004

See all articles by Ilko Naaborg

Ilko Naaborg

University of Groningen

Bert Scholtens

University of Groningen, Faculty of Economics and Business, Department of Economics, Econometrics and Finance

Hanneke Bol

University of Groningen

Jakob de Haan

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

Ralph De Haas

European Bank for Reconstruction and Development; Centre for Economic Policy Research (CEPR); KU Leuven

Date Written: December 2003

Abstract

This paper analyzes the development of the banking sector in European transition countries. We find that, although bank assets increased during the 1990s, credit to the private sector remained relatively low. Foreign-owned banks have become major players in the financial system of these countries. However, foreign bank presence and financial development in general vary considerably among the transition economies. Foreign-owned banks have, in general, higher profitability levels than domestic banks. Furthermore, it appears that foreign and domestic bank performance tend to converge.

Keywords: financial development, financial institutions, foreign bank entry, transition economies, bank performance.

JEL Classification: F36, G15, G20, O16, P34

Suggested Citation

Naaborg, Ilko and Scholtens, L.J.R. (Bert) and Bol, Hanneke and de Haan, Jakob and De Haas, Ralph, How Important are Foreign Banks in the Financial Development of European Transition Countries? (December 2003). Available at SSRN: https://ssrn.com/abstract=484944 or http://dx.doi.org/10.2139/ssrn.484944

Ilko Naaborg (Contact Author)

University of Groningen ( email )

9700 AH Groningen
Netherlands

L.J.R. (Bert) Scholtens

University of Groningen, Faculty of Economics and Business, Department of Economics, Econometrics and Finance ( email )

P.O. Box 800
9700 AV Groningen
Netherlands

Hanneke Bol

University of Groningen ( email )

9700 AH Groningen
Netherlands

Jakob De Haan

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)

Poschinger Str. 5
Munich, DE-81679
Germany

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

De Nederlandsche Bank ( email )

P.O. Box 98
Amsterdam, 1000 AB
Netherlands

Ralph De Haas

European Bank for Reconstruction and Development ( email )

One Exchange Square
London, EC2A 2JN
United Kingdom

HOME PAGE: www.ebrd.com

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

KU Leuven

Naamsestraat 69
Leuven, B-3000
Belgium

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