Foreign bank entry, bank efficiency and market power in Central and Eastern European Countries

0342818 - NHU-C 2011 RIV GB eng J - Journal Article
Poghosyan, T. - Poghosyan, Arsen
Foreign bank entry, bank efficiency and market power in Central and Eastern European Countries.
Economics of Transition. Roč. 18, č. 3 (2010), s. 571-598. ISSN 0967-0750. E-ISSN 1468-0351
Institutional research plan: CEZ:MSM0021620846
Keywords : foreign bank entry * bank efficiency * market power
Subject RIV: AH - Economics
Impact factor: 0.536, year: 2010

This article analyses the implications of the recently observed sharp expansion of foreign banks in the Central and Eastern European Countries (CEECs) as measured by equity ownership. We show that the mode of foreign entry has a pivotal impact on the post-entry performance of banks in CEECs. Foreign greenfield banks are characterized by superior cost efficiency, compared with domestic and foreign-acquired banks. The efficiency of foreign-acquired banks deteriorates in the initial year of acquisition, but improves thereafter. Banks acquired by foreigners have less market power relative to domestic and foreign greenfield banks. Overall, the CEEC banking sectors have benefited from the increased foreign bank participation, both in terms of higher efficiency and more competition.
Permanent Link: http://hdl.handle.net/11104/0185445