engleski

Foreign banks and financial development of transition countries

The participation of foreign-owned banks in financial system of transition countries has increased significantly in the last 15 years. The important question is whether the foreign banks have a positive impact on development of financial sector of these countries? In this paper we provide empirical evidence of the relationship between foreign banks and financial development through cross-country analysis of 26 countries of Central Eastern Europe and the Baltic States, South-Eastern Europe and Commonwealth of Independent States in the period of 2000-2005. We find that impact of foreign banks on domestic credit to private sector as a relevant indicator of the financial development in transition countries is ambiguous. Rather we show that the development of financial system is associated with progress in banking legislation and regulation as well as with level of economic development of transition countries.

Foreign banks; financial development; transition countries

nije evidentirano