Comparative analysis of foreign and domestic bank operations in Hungary

This paper compares the performance of foreign and domestic banks in the process of transition into a market-oriented economy in Hungary. Applying Student's t and Kruskal-Wallis tests to the major balance sheet and income statement ratios for foreign and domestic banks in Hungary for the period 1992-1993, it is concluded that compared to domestic banks, foreign banks are more profitable, not exposed to a greater liquidity or credit risk, providing less money for consumer loans, and hesitant to provide long term loans for development purposes. The policy implications of these findings are discussed. (C) 1996 Academic Press, Inc.