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

Ilko Naaborg, Bert Scholtens, Jakob de Haan, Hanneke Bol, Ralph de Haas

Research output: Contribution to journalArticlepeer-review

21 Citations (Scopus)

Abstract

This article analyses 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.

Original languageEnglish
Pages (from-to)99-123
Number of pages25
JournalJournal of Emerging Market Finance
Volume3
Issue number2
DOIs
Publication statusPublished - 1 Jan 2004

Keywords

  • bank performance
  • Financial development
  • financial institutions
  • foreign bank entry
  • transition economies

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