Do bank activities and funding strategies of foreign and state-owned banks have a differential effect on risk-taking in Central and Eastern Europe?

This paper explores the differential effects of the activity and funding strategies of foreign and state-owned banks in Central and Eastern European countries on risk-taking. Due to potentially beneficial external support, the disciplinary role of non-deposit funding is completely ineffective for both foreign and state-owned banks. Most likely, because of survival beliefs, non-deposit financiers deposit their money even when state-owned banks become riskier. Involvement in non-interest-income activities has no impact on the risk-taking of foreign banks and worsens the risk of state-owned institutions. However, both types of banks are risky when involved in trading, insurance income, rental and other non-banking businesses.