The Entry of Foreign Banks Into Em
are unique and market knowledge about clients can be used at low marginal costs in internal markets. Although the internalization theory has been recently well recognized, we suggest that the entry of foreign banks into the CEE countries has been more aggressive than a defensive approach suggested by the internalization theory. Therefore, the aim of the paper is to analyse the applicability of the eclectic theory in explaining the entry of foreign banks into the Central and Eastern European (CEE) markets. The reminder of the paper is structured as follows: first, we describe the essence of the eclectic theory; then in section three we apply the eclectic theory to the banking sector in the transition countries and suggest some modifications; next, in section four an empirical analysis of foreign banks’ entry motives, ownership advantages and timing is carried out; finally conclusions are presented in section five. 2. The eclectic theory There are many theories which try to explain why firms start to internationalize. Although there is a growing body of literature on FDI, there is no comprehensive approach...
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