Does foreign bank branch activity affect lending behavior?

Oskar Kowalewski (o.kowalewski@ieseg.fr)

No 2019-ACF-02, Working Papers from IESEG School of Management

Abstract: In this study, we examine the effects of foreign branch activity on commercial banks in the Central, Eastern, and Southeastern European countries for the period 1995-2015. We show that more foreign bank branches are present in countries that have higher taxes and regulatory restrictions on bank activity. The increased activity of bank branches negatively a ects foreign-owned bank lending, and to a lesser extent, that of state-owned banks. We attribute this finding to the fact that branches and foreign-owned banks compete for the same type of clients, namely, multinational corporations. The branch e ect seems to be larger for corporate loans than for consumer loans, which confirms our assumptions. Moreover, we find that the negative effect is stronger for foreign banks owned by multinational banks than by non-bank entities.

Keywords: foreign bank branch; lending; subsidiary; crisis; developing markets; EU Firm performance (search for similar items in EconPapers)
Pages: 47 pages
Date: 2019-03
New Economics Papers: this item is included in nep-eec and nep-tra
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ies:wpaper:f201808

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