Foreign Bank Ownership and Household Credit

Abstract: This paper uses survey data for over 23,000 households from 28 transition countries in 2010 to explore how the use of household credit is related to foreign bank ownership. In countries with higher foreign bank presence we find a stronger relation between household income, education and employment status and the use of credit cards and mortgages. Our findings are robust to endogeneity and are supply rather than demand-driven. They suggest that foreign banks- as compared to domestic banks - are more likely to cherry-pick their retail credit customers.