Foreign Bank Ownership and Household Credit

European Banking Center Discussion Paper No. 2011-024

CentER Discussion Paper Series No. 2011-089

37 Pages Posted: 31 Aug 2010 Last revised: 29 May 2013

See all articles by Thorsten Beck

Thorsten Beck

City University London - Sir John Cass Business School; Tilburg University - European Banking Center, CentER

Martin Brown

University of St. Gallen

Multiple version iconThere are 2 versions of this paper

Date Written: September 30, 2012

Abstract

This paper uses survey data for over 23,000 households from 28 transition countries in 2010 to explore how the use of household credit is related to foreign bank ownership. In countries with higher foreign bank presence we find a stronger relation between household income, education and employment status and the use of credit cards and mortgages. Our findings are robust to endogeneity and are supply rather than demand-driven. They suggest that foreign banks- as compared to domestic banks – are more likely to cherry-pick their retail credit customers.

Keywords: Access to finance, Household credit, Bank-ownership

JEL Classification: G2, G18, O16, P34

Suggested Citation

Beck, Thorsten and Brown, Martin, Foreign Bank Ownership and Household Credit (September 30, 2012). European Banking Center Discussion Paper No. 2011-024. Available at SSRN: https://ssrn.com/abstract=1668449 or http://dx.doi.org/10.2139/ssrn.1668449

Thorsten Beck (Contact Author)

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Tilburg University - European Banking Center, CentER ( email )

PO Box 90153
Tilburg, 5000 LE
Netherlands

Martin Brown

University of St. Gallen ( email )

Unterer Graben 21
St. Gallen, CH-9000
Switzerland

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