The Determinants of the Foreign Banks' Expansion in South Eastern Europe: Do Greek Banks Still Follow Their Customers Abroad or Not?

The paper deals with the factors that led to the great penetration of Greek banking sector in South Eastern Europe during 2000-2007. We investigate the validity of the follow the customer hypothesis. Based on the eclectic theory, after controlling for ownership advantages, we found that host country conditions, opportunities in the host financial markets and risk conditions are proved to be significant determinants. Our findings indicate that although follow the customer hypothesis does exist, the utilization of location advantages can better explain Greek banks' expansion.