Foreign banks and the business environment in transition: a cointegration approach.

Hartwell, C. A., 2018. Foreign banks and the business environment in transition: a cointegration approach. Post-Communist Economies, 30 (1), 19 - 35.

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DOI: 10.1080/14631377.2017.1361703

Abstract

The contribution of foreign banks to the development of the financial sectors in emerging markets, and especially the transition economies of Central and Eastern Europe, is well-known. The purpose of this article is to focus on an area of foreign bank influence that has thus far only begun to emerge from the extant literature: the effect of foreign banks on the broader business environment in transition. In addition to improving financial intermediation and broader access to credit, has the presence of foreign financial institutions helped to shape a better business environment in the long-run? Or did foreign banks retard local institutional development and thus worsen the overall business environment? Using cointegration techniques across a sample of 21 diverse transition countries from 1983 to 2015, I find that foreign bank entry had a positive impact across business environment indicators, but with some indicators taking longer to influence than others. The policy implications are that business environments can be improved by facilitating foreign bank entry rather than restricting it.

Item Type:Article
ISSN:1463-1377
Uncontrolled Keywords:business environment; foreign bank entry; cointegration; Central and Eastern Europe
Group:Faculty of Management
ID Code:30629
Deposited By: Unnamed user with email symplectic@symplectic
Deposited On:30 Apr 2018 13:14
Last Modified:30 Apr 2018 13:14

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