The Presence of Foreign Banks in Eastern Europe: Which Financial Risks?

The 2008-2009 financial crisis, which affected banks in the European Union, draws attention to how vulnerable eastern and central European countries are to the flow of capital from western European banks and to balance-of-payment crises. These countries face two sorts of financial risks, which have...

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Bibliographic Details
Published in:Revue d'études comparatives est-ouest 2010-03, Vol.41 (1), p.35-62
Main Authors: Brana, Sophie, Lahet, Delphine
Format: Article
Language:fre
Subjects:
Balance of payments
Banking
Bulgaria
Capital
Central Eastern Europe
Credit
Crises
Czech Republic
Eastern Europe
Economic conditions
Estonia
Europe
European Union
Financial crisis
Financial risks
Foreign banks
Hungary
International banking
International business enterprises
Latvia
Lithuania
Risk
Romania
Slovakia
Spillovers
Subsidiary
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Summary:The 2008-2009 financial crisis, which affected banks in the European Union, draws attention to how vulnerable eastern and central European countries are to the flow of capital from western European banks and to balance-of-payment crises. These countries face two sorts of financial risks, which have increased since 2000: first of all, the direct financial exposure between western European banks and these countries; and secondly, the risk of regional contagion owing to spillover effects and a common creditor channel, as parent banks pass their problems on to regional subsidiaries. Estonia runs both these risks whereas Latvia, Lithuania, Romania, Bulgaria and Hungary are the most exposed to foreign debt-holders. Though apparently less exposed to the direct risk than to the indirect one, the Czech Republic and Slovakia are not protected from banking problems and could fall victim to regional contagion. Adapted from the source document.
ISSN:0338-0599
DOI:10.4074/S0338059910001026