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Do Reforms in Transition Economies Affect Foreign Bank Entry?

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  • Robert Lensink
  • Jakob de Haan

Abstract

Using a newly developed database for eight transition economies, this paper examines whether reforms and political freedom are important for foreign bank entry. We provide evidence that foreign bank entry positively responds to reform measures. We also find some support for the importance of political freedom. Our estimates suggest that economic reform affects foreign bank entry by enhancing the efficiency of the financial sector and by stimulating domestic investments.

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  • Robert Lensink & Jakob de Haan, 2002. "Do Reforms in Transition Economies Affect Foreign Bank Entry?," International Review of Finance, International Review of Finance Ltd., vol. 3(3‐4), pages 213-232, September.
    • Handle: RePEc:bla:irvfin:v:3:y:2002:i:3-4:p:213-232
    DOI: 10.1111/j.1369-412X.2002.00039.x
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    1. Barry Williams, 1997. "Positive Theories of Multinational Banking: Eclectic Theory Versus Internalisation Theory," Journal of Economic Surveys, Wiley Blackwell, vol. 11(1), pages 71-100, March.
    2. Luca PAPI & Debora REVOLTELLA, 1999. "Foreign Direct Investment in the Banking Sector: a Transitional Economy Perspective," Working Papers 113, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    3. Lukasz Konopielko, 1999. "Foreign Banks' Entry into Central and East European Markets: Motives and Activities," Post-Communist Economies, Taylor & Francis Journals, vol. 11(4), pages 463-485.
    4. Lensink, Robert & Hermes, Niels, 2004. "The short-term effects of foreign bank entry on domestic bank behaviour: Does economic development matter?," Journal of Banking & Finance, Elsevier, vol. 28(3), pages 553-568, March.
    5. Clarke, George & Cull, Robert & Martinez Peria, Maria Soledad & Sanchez, Susana M., 2001. "Foreign bank entry - experience, implications for developing countries, and agenda for further research," Policy Research Working Paper Series 2698, The World Bank.
    6. Dario Focarelli & Alberto Franco Pozzolo, 2000. "The Determinants of Cross-Border Bank Shareholdings; an Analysis with Bank-Level Data from OECD Countries," Temi di discussione (Economic working papers) 381, Bank of Italy, Economic Research and International Relations Area.
    7. Tomislav Galac & Evan Kraft, 2000. "What Has Been the Impact of Foreign Banks in Croatia?," Surveys 4, The Croatian National Bank, Croatia.
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    Cited by:

    1. Tigran Poghosyan & Jakob de Haan & Jakob de Haan, 2008. "Determinants of Cross-Border Bank Acquisitions in Transition Economies: A Latent Class Analysis," CESifo Working Paper Series 2372, CESifo.
    2. Tigran Poghosyan & Jakob De Haan, 2010. "Determinants of cross‐border bank acquisitions in transition economies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 18(4), pages 671-696, October.
    3. Flaviu Mihaescu & Liviu Voinea, 2006. "The Determinants of Foreign Banking Activity in South East Europe: Do FDI, Bilateral Trade and EU Policies Matter?," wiiw Balkan Observatory Working Papers 67, The Vienna Institute for International Economic Studies, wiiw.

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