Foreign Banks' Entry into Central and East European Markets: Motives and Activities

This article presents some theoretical issues of multinational banking and their application to the pattern of foreign banks' operations in three selected Central European countries: Poland, Hungary and the Czech Republic, using postal survey results and an OLS/logit model of entry determinants. Additionally, the effects of foreign banks' entry in these countries are discussed. A detailed review of foreign banks' activities is presented in the Appendix. Foreign banks appear to be one of the most important factors influencing the shape of banking sectors in the countries analysed. However, banks' profiles differ, depending on the individual host country's level of development and privatisation progress. Generally, their activities tend to focus mostly on corporate services, while the perceived need for support of the client base is the most important reason for expansion. Although the direct benefits from entry are limited, indirect ones are quite evident, especially in the areas of corporate finance and foreign trade services.