International deregulation in the financial sector has intended to create a level playing field for domestically and foreign owned banks. As a result, one of the most significant developments in the financial sector has been the increased relevance of foreign banking with a physical presence in the host country. Foreign banks play a key role in the Caribbean, Central and Eastern Europe, Central Asia and sub Saharan Africa.
This book contributes to the literature on foreign banking by investigating three research questions. First, what is the importance of foreign banks in Central and Eastern Europe? Next, are the motives of foreign banks to become active in Central and Eastern Europe related to the mode of entry? Third, does foreign ownership affect bank profitability and bank efficiency and what is the role of the institutional environment in this respect?
This book contains original work of high quality as shown by the increasing quality of the journals in which the research output has been accepted. In addition, the dissertation has a broad view on the analyses of banks in transition economies. The author successfully applies different analytical techniques and empirical methodologies. The interpretation of the empirical findings are critically compared with existing literature and the policy recommendations are relevant. – Rudi vander Vennet (Professor in Finance, University of Ghent)