Abstract/Details

Financial liberalization, multinational banks and investment: Three essays on the cases of Hungary and Poland


1998 1998

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Abstract (summary)

The number of multinational banks (MNBs) has increased in Central Europe, while the amount of real credit has decreased. This dissertation investigates whether there is a causal link between increased international financial competition (IFC) and the decline of real credit in Poland and Hungary, and what the impact of declining real lending is on investment across industries.

First, based on the Hungarian and Polish experiences I analyze whether there is a link between greater IFC and less real credit. I provide an argument that links the number of MNBs to capital levels for domestic banks, and hence to their lending capacity. I test this argument empirically using data from central banks, central statistical offices, and private institutions, and exploring alternative explanations for declining real credit. The evidence suggests that Polish and Hungarian banks are placed in a paradoxical situation since greater IFC raises their need for capital, but also limits their ability to attract it. The evidence indicates further that the efficiency increases from competition do not outweigh the limits on domestic banks' capital, which in turn helps to explain the decline in real credit.

Second, I use panel and time series data to test whether early IFC has partially caused declining real lending. I test this hypothesis based on a credit supply function for domestic banks, and on data for 9 regional and 5 specialized Polish banks for 39 months. The estimation results indicate that domestic banks increase lending in anticipation of greater international financial competition, but that they decrease their lending once MNBs have established operations. As a net result of these two effects the supply of credit declines.

Third, I study how the decline in real credit has affected the amount of investment in Polish industries. I use a model that links finance and investment, and a data set of 23 observations for 25 industries. The panel estimation results suggest that internal and external finance are significant in determining investment, and that industries prefer internal over external finance.

Indexing (details)


Subject
Economics;
Finance;
Banking
Classification
0501: Economics
0508: Finance
0770: Banking
Identifier / keyword
Social sciences
Title
Financial liberalization, multinational banks and investment: Three essays on the cases of Hungary and Poland
Author
Weller, Christian Erik
Number of pages
150
Publication year
1998
Degree date
1998
School code
0118
Source
DAI-A 59/02, Dissertation Abstracts International
Place of publication
Ann Arbor
Country of publication
United States
ISBN
9780591758726, 0591758725
Advisor
Epstein, Gerald
University/institution
University of Massachusetts Amherst
University location
United States -- Massachusetts
Degree
Ph.D.
Source type
Dissertations & Theses
Language
English
Document type
Dissertation/Thesis
Dissertation/thesis number
9823787
ProQuest document ID
304430424
Copyright
Database copyright ProQuest LLC; ProQuest does not claim copyright in the individual underlying works.
Document URL
http://search.proquest.com/docview/304430424
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