Kocenda, Evzen and Iwasaki, Ichiro (2020) Bank survival in Central and Eastern Europe. INTERNATIONAL REVIEW OF ECONOMICS & FINANCE, 69. pp. 860-878. ISSN 1059-0560, 1873-8036
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We analyze factors linked to bank survival on large dataset covering 17 CEE markets during the period of 2007-2015 by estimating the Cox proportional hazards model. We group banks across countries and according to their financial soundness. The overall financial development improves survival probabilities and its impact exhibits decreasing marginal returns as it is strongest in countries with lower level of financial development and banking reforms and in banks with low level of solvency. Measures of ownership structure, legal form, and corporate governance are the key economically significant factors that exhibit strongest economic effect on bank survival. Financial performance indicators predict bank survival rate with intuitively expected positive impact but their effect, in terms of economic significance, is smaller in comparison to other factors as well as the impact found in developed markets. Effect of above factors is most pronounced for banks with low financial soundness in term of their solvency. Results also appear to indicate that it makes exit more likely during the global financial crisis, shortly afterwards, and during the initial stage of the European sovereign debt crisis. This result is critical for central banks due to their regulatory and governance mandate. The results are robust with respect to size, age, and alternative assumptions on survival distribution.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | PROPORTIONAL HAZARDS MODEL; GLOBAL FINANCIAL CRISIS; CORPORATE GOVERNANCE; FAILURES; DETERMINANTS; OWNERSHIP; DISTRESS; DEFAULT; STATE; FUNDAMENTALS; Bank survival; Banking reform; Central banks; Central and Eastern Europe; Emerging markets; Survival and exit determinants; Hazards model |
| Subjects: | 900 History & geography > 940 General history of Europe |
| Divisions: | Institute for East and Southeast European Studies (IESES) |
| Depositing User: | Dr. Gernot Deinzer |
| Date Deposited: | 16 Mar 2021 13:45 |
| Last Modified: | 16 Mar 2021 13:45 |
| URI: | https://pred.uni-regensburg.de/id/eprint/43917 |
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