The economic determinants and behavior of foreign banks in emerging countries during a period of global economic downturn

In recent years, foreign banks have significantly expanded their presence in many emerging countries. In our study, we use panel data to examine the economic determinants of foreign banks’ entry modes into emerging European countries during the period from 1994 to 2008. Our results suggest that a parent bank's choice of an organizational structure is a function of its strategic plans in the region and the countries’ characteristics. After further consideration of the financial crisis of 2007–2010, we find that as a result, parent banks tend to behave differently toward their foreign affiliates depending on its organizational structure. Our findings suggest that these differences are especially observable during periods of economic expansion and home financial distress.