Inherited or Earned? Performance of Foreign Banks in Central and Eastern Europe

By E. Jurzyk, Olena Havrylchyk. Social Science Research Network, 2008

128 citations recorded by the source corpus.

Using a combination of propensity score matching and difference-in-difference techniques we investigate the impact of foreign bank ownership on the performance and market power of acquired banks operating in Central and Eastern Europe. This approach allows us to control for selection bias as larger but less profitable banks were more likely to be acquired by foreign investors. We show that during three years after the takeover, banks have become more profitable due to cost minimization and better risk management. They have additionally gained market share, because they passed their lower cost of funds to borrowers in terms of lower lending rates. Previous studies failed to pick up the improvements in performance of takeover banks, because they did not account for the performance of financial institutions before acquisitions.

Subfields: Finance

View Paper: https://www.semanticscholar.org/paper/694cdec29c3914039992fe07f8832f882d9d95df

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In Finance

1. Y. Korniyenko
2. Elena Loukoianova
3. Alexander Pivovarsky
4. Ralph De Haas
5. Neeltje van Horen

Citations in the corpus

• Foreign Banks and the Vienna Initiative: Turning Sinners into Saints? (2012, background): “The authors would like to thank Bas Bakker, Eugenio Cerutti, Costas Christou, Erik Berglöf, Hans Degryse, Zuzana Fungáčová, Mark Griffiths, Anne-Marie Gulde, Simon Johnson, Christoph Klingen, Hannah Levinger, Elitza Mileva, Piroska M. Nagy, Katharina Pistor, Alberto F. Pozzolo, Magnus Saxegaard, Jer”