Foreign Bank Participation and Banking Crises in Transition Economies

Abstract

Using a fixed effect multivariate panel logit econometric model and taking possible endogenity problem into account, we test the hypothesis that foreign bank participation contributes to decrease in banking crises in transition economies in 1990-2006. The results suggest that foreign bank participation decreases the possibility of banking crises, controlling for other factors that may cause banking crises. This paper contributes to the literature by presenting the first empirical evidence on the negative relationship between the actual level of foreign bank presence (or foreign bank concentration) and banking crises for transition countries.

Sažetak

Koristeći multivarijatni panelni logit ekonometrijski model s fiksnim učinkom i uzimajući u obzir mogući problem endogenosti, testirali smo hipotezu da participacija stranih banaka doprinosi smanjenju bankarskih kriza u tranzicijskim gospodarstvima u periodu od 1990-2006. Rezultati ukazuju na to da participacija stranih banaka umanjuje mogućnost za bankarske krize kontrolirajući ostale faktore koji takve krize mogu uzrokovati. Ovaj rad doprinosi literaturi tako što predstavlja prve empirijske dokaze negativnog odnosa stvarne razine prisustva stranih banaka (koncentracije stranih banaka) i bankarskih kriza u tranzicijskim gospodarstvima.

Keywords::

• Financial Crises
• Banks
• Capital and Ownership Structure
• Transitional Economies
• Panel Study

Ključne riječi::

• Financijske Krize
• Banke
• Struktura Kapitala I VlasnišTva
• Tranzicijska Gospodarstva
• panel istraživanje

JEL codes::

• G01
• G21
• G32
• P2
• C2