Foreign Bank Entry and Credit Allocation in Emerging Markets

43 Pages Posted: 8 Dec 2009

See all articles by Hans Degryse

Hans Degryse

KU Leuven, Department Accounting, Finance and Insurance; Centre for Economic Policy Research (CEPR)

Olena Havrylchyk

CEPII, Centre d'Etudes Prospectives et d'Info. Internationales, Paris; Université Paris Ouest - Nanterre, La Défense - EconomiX

Emilia Magdalena Jurzyk

KU Leuven - Centre for Institutions and Economic Performance (LICOS)

Sylwester Kozak

National Bank of Poland; SGGW - Faculty of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: December 8, 2009

Abstract

We employ a unique data set containing bank-specific information to explore how foreign bank entry determines credit allocation in emerging markets. We investigate the impact of the mode of foreign entry (greenfield or takeover) on banks’ portfolio allocation to borrowers with different degrees of informational transparency, as well as by maturities and currencies. The impact of foreign entry on credit allocation may stem from the superior performance of foreign entrants (“performance hypothesis”), or reflect borrower informational capture (“portfolio composition hypothesis”). Our results are broadly in line with the portfolio composition hypothesis, showing that borrower informational capture determines bank credit allocation.

Keywords: banks, ownership, credit allocation

JEL Classification: G21, G28, G34, L11

Suggested Citation

Degryse, Hans and Havrylchyk, Olena and Jurzyk, Emilia Magdalena and Kozak, Sylwester, Foreign Bank Entry and Credit Allocation in Emerging Markets (December 8, 2009). TILEC Discussion Paper No. 2009-044. Available at SSRN: https://ssrn.com/abstract=1520385 or http://dx.doi.org/10.2139/ssrn.1520385

Hans Degryse (Contact Author)

KU Leuven, Department Accounting, Finance and Insurance ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Olena Havrylchyk

CEPII, Centre d'Etudes Prospectives et d'Info. Internationales, Paris ( email )

113 rue de Grenelle
Paris, F-75007
France

Université Paris Ouest - Nanterre, La Défense - EconomiX ( email )

200 Avenue de la République
Nanterre cedex, Nanterre Cedex 92000
France

Emilia Magdalena Jurzyk

KU Leuven - Centre for Institutions and Economic Performance (LICOS) ( email )

Waaistraat 6 - box 3511
Leuven, 3000
Belgium

Sylwester Kozak

National Bank of Poland ( email )

00-919 Warsaw
Poland

SGGW - Faculty of Economics ( email )

ul. Nowoursynowska 166
Warsaw, 02-787
Poland

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