Multinational Banks: Protective Factors of Financial Stability in Central and Eastern Europe?

Gábor Kutasi
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Gábor Kutasi: Corvinus University Budapest

Chapter 8 in Foreign Direct Investment in Central and Eastern Europe, 2017, pp 171-192 from Palgrave Macmillan

Abstract: Abstract The chapter analyses the determinants of capital adequacy in the banking FDI of Central and Eastern European countries, relying on the Bankscope database. The main hypothesis is that multinational ownership softened the impact of the crisis in commercial banks, as the parent banks capitalised those affiliates which turned red in household and corporate crediting. This type of cross-market rebalancing is tested by a regression analysis, and the “too-big-to-fail” nature of the parent bank is the main significant determinant in all specifications, supporting the hypothesis.

Keywords: Foreign Direct Investment; Capital Adequacy; Banking Market; Optimal Capital Structure; Capital Adequacy Ratio (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:pal:stuchp:978-3-319-40496-7_8

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DOI: 10.1007/978-3-319-40496-7_8

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