What Determines the Composition of Banks' Loan Portfolios? Evidence from Transition Countries
Ralph De Haas
European Bank for Reconstruction and Development
London School of Economics & Political Science (LSE) - Department of Finance; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)
European Bank for Reconstruction and Development (EBRD)
August 6, 2009
Journal of Banking and Finance, Vol. 34, No. 2, pp. 388-398, 2010
This paper explores how bank characteristics and the institutional environment influence the composition of banks’ loan portfolios. We use a new and unique data set based on the EBRD Banking Environment and Performance Survey (BEPS), which was conducted for 220 banks in 20 transition countries. We show that bank ownership, bank size, and legal creditor protection are important determinants of the composition of banks’ loan portfolios. In particular, we find that foreign banks play an active role in mortgage lending. Moreover, banks that perceive pledge and mortgage laws to be of high quality choose to focus more on mortgage lending.
Number of Pages in PDF File: 45
Keywords: Foreign banks, SMEs, Legal environment, Portfolio composition
JEL Classification: F36, G21, K22, P27working papers series
Date posted: December 17, 2007 ; Last revised: April 9, 2010
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