Economic effects of foreign bank inputs: Eastern European country examples

The beginning of the 1990s was a period in which many countries' understanding of economic management changed and command economies were replaced by free market economies. Especially in Eastern European countries, they have started to adapt to free market conditions and to integrate into international markets with the declaration of independence and the change of country administrations. In these economies, real sector have been developed especially with the investments of Western European capital. Foreign capital entered not only into the real sector, but also to the financial sector of transition economies. In the related economies which command economic structure governed, financial system has not been developed enough. Foreign banks came into financial system in different ways in order to growth of banking system and to access of household to numerous banking instruments in early 1990s. In this study we aim to measure the direction of effects of foreign banks on economies in Eastern European economies namely, Belarus, Moldavia, Slovakia, Hungary, Bulgaria, Romania, Ukraine, Czech Republic and Poland which are included into definition of Eastern European countries. With this aim, data belonging to 2001 – 2018 period is analyzed via panel data econometric method. The results will lead to revealing the impact of the foreign banking system on the country's economies and to formulate policy recommendations in this direction.