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Foreign Banks in Croatia: Another Look

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  • Evan Kraft

Abstract

After a period of entry mainly through greenfield investment, foreign banks purchased several of the largest Croatian banks in late 1999 and 2000. This paper follows a previous study completed in early 2000 and reviews the effects of foreign entry on the Croatian banking market, using the results of written and oral interviews and balance sheet data. The main findings are that foreign banks have played a major role in increasing competition, bank efficiency and the quality of banking products and services. In addition, regression analysis shows that de novo foreign banks founded through greenfield investment have significantly better asset quality than other banks, and have increased overall lending as well as lending to households and lending to enterprises more rapidly than other types of banks.

Suggested Citation

  • Evan Kraft, 2002. "Foreign Banks in Croatia: Another Look," Working Papers 10, The Croatian National Bank, Croatia.
    • Handle: RePEc:hnb:wpaper:10
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    References listed on IDEAS

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    Cited by:

    1. Mamatzakis, E. & Staikouras, C. & Koutsomanoli-Fillipaki, N., 2005. "Competition and concentration in the banking sector of the South Eastern European region," Emerging Markets Review, Elsevier, vol. 6(2), pages 192-209, June.
    2. Peric Blanka Skrabic & Konjusak Nikola, 2017. "How did rapid credit growth cause non-performing loans in the CEE Countries?," South East European Journal of Economics and Business, Sciendo, vol. 12(2), pages 73-84, December.
    3. de Haas, Ralph & van Lelyveld, Iman, 2006. "Foreign banks and credit stability in Central and Eastern Europe. A panel data analysis," Journal of Banking & Finance, Elsevier, vol. 30(7), pages 1927-1952, July.
    4. Jasminka Sohinger & Darko Horvatin, 2006. "Financial Liberalization In Croatia," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 15(2), pages 173-198, december.
    5. Tomislav Galac, 2005. "Results of the Third CNB Bank Survey: Croatian Banking in the Consolidation and Market Positioning Stage, 2000 - 2002," Surveys 14, The Croatian National Bank, Croatia.
    6. De Haas, Ralph & Ferreira, Daniel & Taci, Anita, 2010. "What determines the composition of banks' loan portfolios? Evidence from transition countries," Journal of Banking & Finance, Elsevier, vol. 34(2), pages 388-398, February.
    7. De Haas, Ralph & Naaborg, Ilko, 2006. "Foreign banks in transition countries. To whom do they lend and how are they financed?," MPRA Paper 6320, University Library of Munich, Germany.
    8. Sohinger, Jasminka & Horvatin, Darko, 2006. "International Capital Flows and Financial Markets in Transition Economies: The Case of Croatia," Institute of European Studies, Working Paper Series qt74t7b43f, Institute of European Studies, UC Berkeley.
    9. Vidakovic, Neven, 2014. "Exchange rate regime and household's choice of debt," MPRA Paper 54219, University Library of Munich, Germany.
    10. Neven Vidakovic, 2015. "Bank’s choice of loan portfolio under high regulation – example of Croatia," FIP - Journal of Finance and Law, Effectus - University College for Law and Finance, vol. 2(1), pages 29-44.
    11. Tomislav Galac & Lana Dukić, 2008. "Results of the Fourth CNB Bank Survey," Surveys 16, The Croatian National Bank, Croatia.
    12. Ahmet Faruk Aysan & S. P. Ceyhan, 2006. "Globalization of Turkey's Banking Sector: The Determinants of Foreign Banking Penetration in Turkey," Working Papers 2006/20, Bogazici University, Department of Economics.
    13. Grigol, Modebadze, 2011. "Foreign Investment Effects on the Banking Sector in Georgia," MPRA Paper 32897, University Library of Munich, Germany.
    14. De Haas, Ralph & Ferreira, Daniel & Taci, Anita, 2007. "What determines banks’ customer choice? Evidence from transition countries," MPRA Paper 6319, University Library of Munich, Germany.
    15. Van Tassel, Eric & Vishwasrao, Sharmila, 2007. "Asymmetric information and the mode of entry in foreign credit markets," Journal of Banking & Finance, Elsevier, vol. 31(12), pages 3742-3760, December.
    16. Mario Bambulovic & Miljana Valdec, 2020. "Testing the characteristics of macroprudential policies’ differential impact on foreign and domestic banks’ lending in Croatia," Public Sector Economics, Institute of Public Finance, vol. 44(2), pages 221-249.
    17. Ralph de Haas & Ilko Naaborg, 2005. "Foreign Banks in Transition Economies: Small Business Lending and Internal Capital Markets," International Finance 0504004, University Library of Munich, Germany.
    18. Vidakovic, Neven & Zbašnik, Dušan, 2014. "Capital Flows, Credit Crunch and Deleveraging Dynamics: The Case of Slovenia, Croatia and Hungary in Comparison," MPRA Paper 63959, University Library of Munich, Germany.
    19. Evan Kraft, 2006. "How Competitive Is Croatia's Banking System?," Working Papers 14, The Croatian National Bank, Croatia.

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    More about this item

    Keywords

    foreign banks; foreign direct investment; Croatia; banking;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • P34 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

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