Conditions and results of foreign banks' market entry in CEECs: Comparative empirical evidence

The entry of foreign banks into the Central and Eastern European countries (CEECs) markets has been rapid, remarkable and massive. This paper presents some empirical results of foreign banks' entry motives, activities, operation and strategies in selected CEECs (Estonia, Lithuania, Poland, and Romania), three of them hoping to join soon the European Union integrated financial market. The paper is based on special survey results obtained from domestic and foreign-owned banks in these countries in 2001. According to the results of the study, the main incentives motivating foreign entry have been to exploit new business opportunity and/or market expansion strategy. The host country market specifies, advantages and disadvantages of foreign banks, main target groups, and fields of activities are discussed in the paper. Foreign banks' motives for strategic long-term stay in the host country market, some more important characteristics of banks' governance and management are also presented in the paper. Interesting questions were, who are the key decision-makers in majority foreign owned banks, how banks adopted know-how and risk management systems from the mother bank, how the mother bank helps its daughter in the host country, etc. The competitive pressure by foreign banks and domestic banks survival prospects issues are also addressed in the paper.