Stepic, Herbert --- "Foreign direct investment – the impact of foreign banks in Central and Eastern Europe" [2003] ELECD 106; in Tumpel-Gugerell, Gertrude; Mooslechner, Peter (eds), "Structural Challenges for Europe" (Edward Elgar Publishing, 2003)

Book Title: Structural Challenges for Europe

Editor(s): Tumpel-Gugerell, Gertrude; Mooslechner, Peter

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843764748

Section: Chapter 6

Section Title: Foreign direct investment – the impact of foreign banks in Central and Eastern Europe

Author(s): Stepic, Herbert

Number of pages: 7

Extract:

6. Foreign direct investment ­ the
impact of foreign banks in Central
and Eastern Europe
Herbert Stepic

My approach towards the subject of foreign direct investment (FDI) and
the impact of foreign banks in Central and Eastern Europe (CEE) is an
empirical one. Drawing on RZB's (Raiffeisen Zentralbank Österreich)
experiences, I aim to provide an overview of the region's economic devel-
opment and an assessment of the role that FDI in general and that FDI by
foreign-owned banks in particular has played in the process. It is obvious
that the political and economic transformation from centrally steered to
market economies and imminent partners in an enlarged EU was dramatic
in every sense of the word, and the contributions rendered by foreign finan-
cial sectors were and continue to be crucially important. Both the region
itself as well as its neighbouring countries benefit from the economic per-
spectives and opportunities of these totally redesigned markets.
In my opinion, financial intermediation and structural changes are
strongly interconnected. Financial intermediation had a very strong effect
on the catching-up process. Looking back to 1986, when RZB made its
first ­ at that time revolutionary ­ step into the Hungarian market, the
Eastern European banking landscape could be portrayed as one with prac-
tically no competition, coupled with a complete lack of customer orienta-
tion, a low degree of management know-how, insufficient technical
equipment, a very poorly developed loan culture and risk awareness and
last, but not least, widespread corruption at all levels ...