Foreign bank entry, institutional development and credit access: firm-level evidence from 22 transition countries

Maria Clara Rueda Maurer ()
Additional contact information
Maria Clara Rueda Maurer: Swiss National Bank, Postal: Boersenstrasse 15, P.O. Box, CH-8022 Zurich, Switzerland, http://www.snb.ch

No 2008-4, Working Papers from Swiss National Bank

Abstract: In this paper I examine how the protection of creditors' rights influence the way in which foreign bank entry affects the access to credit of firms. Using a sample of more than 6000 firms in 22 transition countries I find that as bankruptcy proceedings become more inefficient foreign bank entry is more likely to crowd-out small and opaque firms. Conversely, as the protection of creditors' rights improve, the positive association between foreign banks and firms' credit constraints diminishes. These results are robust to controls for endogeneity of foreign banks. The interaction of foreign banks and the protection of creditors rights would explain the disparity of results obtained by previous studies: In countries with an adequate protection of creditor rights foreign bank entry may benefit all firms; By contrast, in countries with weak protection of creditor rights foreign bank entry is likely to result in a credit crunch.

Keywords: Institutional development; Transition; Foreign Bank Entry; Information asymmetries; Small Business Lending. (search for similar items in EconPapers)
JEL-codes: D82 G10 G21 G31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-com, nep-ent and nep-tra
Date: Written 2008-04-29

Downloads: (external link)
http://www.snb.ch/n/mmr/reference/working_paper_20 ... _paper_2008_04.n.pdf Full text (text/plain)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Access Statistics for this paper

More papers in Working Papers from Swiss National Bank
Contact information at EDIRC.
Series data maintained by Enzo Rossi ().