What Determines the Composition of Banks' Loan Portfolios? Evidence from Transition Countries

45 Pages Posted: 17 Dec 2007 Last revised: 9 Apr 2010

See all articles by Ralph De Haas

Ralph De Haas

European Bank for Reconstruction and Development; Centre for Economic Policy Research (CEPR); Tilburg University - Department of Finance

Daniel Ferreira

London School of Economics - Department of Finance; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Anita Taci

European Bank for Reconstruction and Development (EBRD)

Date Written: August 6, 2009

Abstract

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.

Keywords: Foreign banks, SMEs, Legal environment, Portfolio composition

JEL Classification: F36, G21, K22, P27

Suggested Citation

De Haas, Ralph and Ferreira, Daniel and Taci, Anita, What Determines the Composition of Banks' Loan Portfolios? Evidence from Transition Countries (August 6, 2009). Journal of Banking and Finance, Vol. 34, No. 2, pp. 388-398, 2010. Available at SSRN: https://ssrn.com/abstract=1074264 or http://dx.doi.org/10.2139/ssrn.1074264

Ralph De Haas (Contact Author)

European Bank for Reconstruction and Development ( email )

One Exchange Square
London, EC2A 2JN
United Kingdom

HOME PAGE: www.ebrd.com

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Daniel Ferreira

London School of Economics - Department of Finance ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
(+44) 20 7955 7544 (Phone)

HOME PAGE: http://personal.lse.ac.uk/FERREIRD/

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Anita Taci

European Bank for Reconstruction and Development (EBRD) ( email )

One Exchange Square
London, EC2A 2EH
United Kingdom

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