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Foreign Banks and Credit Stability in Central and Eastern Europe: A Panel Data Analysis

Ralph De Haas () and Iman Lelyveld

DNB Staff Reports (discontinued) from Netherlands Central Bank

Abstract: We study whether foreign and domestic banks in Central and Eastern Europe react differently to business cycle conditions and host country banking crises. Our unique panel dataset comprises data of more than 250 banks for the period 1993-2000, with detailed information on bank ownership and mode of entry. We show that during crisis periods (former) domestic banks contracted their credit base, whereas greenfield foreign banks did not. Also, home country conditions matter for foreign bank growth, as there is a significant negative relationship between home country economic growth and host country credit by greenfields. Finally, foreign bank subsidiary's credit growth is influenced by the health of the parent bank.

Keywords: foreign banks; transition economies; credit growth; financial stability (search for similar items in EconPapers)
JEL-codes: C23 F36 G21 P34 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2003
New Economics Papers: this item is included in nep-mfd and nep-tra
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https://www.dnb.nl/binaries/staff109_tcm46-146886.pdf (application/pdf)

Related works:
Journal Article: Foreign banks and credit stability in Central and Eastern Europe. A panel data analysis (2006) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:dnb:staffs:109

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