Three essays on the liberalization of the banking market, the mode of entry of foreign banks, and the performance of banks.

Summary This thesis focuses on the impact of foreign bank entry patterns on the performance of the local banking system in the Czech Republic, Hungary, and Poland. To this end, we first conducted a comparative analysis of cost efficiency and productivity growth between foreign de novo banks and foreign acquiring banks, and between the latter and domestic banks. Second, we focused our analysis on the impact of lifting restrictions on each mode of foreign bank entry on the performance of the local banking system. The results show that de novo foreign banks enjoy better cost efficiency and higher productivity growth than foreign acquiring banks, while there does not appear to be a significant difference in cost efficiency between foreign acquiring banks and domestic banks. Moreover, while the lifting of entry restrictions on de novo foreign banks had a limited impact on the performance of the local banking system, the lifting of entry restrictions on foreign acquirer banks led to significant declines in profitability and interest margins, and an increase in administrative costs both for all banks and for domestic banks alone.