Business Intelligence

Inherited Or Earned? Performance Of Foreign Banks In Central And Eastern Europe

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Executive Summary

Using a combination of propensity score matching and difference-in-difference techniques the author investigates the impact of foreign bank ownership on the performance and market power of acquired banks operating in Central and Eastern Europe. This approach allows one to control for selection bias as larger but less profitable banks were more likely to be acquired by foreign investors and also shows that during three years after the takeover, banks have become more profitable due to cost minimization and better risk management.

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