Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94159
Authors: 
Claeys, Sophie
Hainz, Christa
Year of Publication: 
2006
Series/Report no.: 
SFB/TR 15 Discussion Paper 182
Abstract: 
Policy makers often decide to liberalize foreign bank entry but at the same time restrict the mode of entry. We study how different entry modes affect the interest rate for loans in a model in which domestic banks possess private information about their incumbent clients but foreign banks have better screening skills. Our model predicts that competition is stronger if market entry occurs through a greenfield investment and therefore domestic banks' interest rates are lower. We find empirical support for our results for a sample of banks from ten Eastern European countries for the period 1995-2003.
Subjects: 
banking
foreign entry
mode of entry
interest rate
asymmetric information
JEL: 
G21
D4
L31
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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