Challenges of regionalism: Development and spatial structure of the hungarian banking system section: Financial issues

KEY WORDS: Hungarian banking system, transitional financial markets, banking network, global-local dichotomy, and uneven regional development. ABSTRACT: The growing literature on regional finance suggests that credit allocation in regional banking system and the different national banking systems are different according to their stage of development, and frictions also exist across regions within national economies, resulting in different availability of capital. Less developed banking systems – including regional banks as well – have a lesser capacity to promote their economic development and might experience certain disadvantage as a result of the financial integration in Europe. Despite regional and local banks can serve local economic interests better than financial-centre banks whose priorities relate more to the single European and global markets, less advanced banking systems can be controlled more easily by the large universal banks of the financial core areas. This latter argument is refers very much to the accessing countries of Central and Eastern Europe, such as Poland, Czech Republic, Slovenia, Slovakia and Hungary which followed their reintegration into the world financial market in the early 1990s. They not only have to adopt new technologies and the financial behaviour it accommodates, but also have to cope with a legacy of bad debts and a lack of experience in credit risk assessment. Central –Eastern European banking systems are accelerating through some features of the stages of development as a result of competition with more advanced systems and state encouragement of banking development. As European Union membership approaches in Central Europe’s more advanced economies, Western European banks are ‘aggressively’ moving to expand into what will soon be a home market for them. The result is the increasing pressure on margins, as more banks compete for relatively little business. This results in a reversal process of concentration than in the EU, namely the growing number of institutions. Making matters worse for the locals, the foreign banks often boast deeper pockets, greater expertise and more solid reputation. All these challenges which are to be faced are common in these countries, but what could be varied from country to country is the spatial and institutional structure of the national banking systems. The paper is concerned with the spatial characteristics of the Hungarian banking system. Financial services became the key sector in the processes of economic transformation and differentiated by uneven regional development. The spatial structure of the banking sector is characterised by a large-scale concentration in Budapest, but the foundation boom of branch offices is also typical in the regions, as the necessity of presence on the local markets, as well as the competition for the retail market stimulate banks to expand their branch networks. Commercial banks, which have their headquarters exclusively in Budapest, largely concentrate only on the collections of deposits in their national network, resulting in capital drainage and net capital loss in most of the regions. The presence of the centralised capital market and the lack of decentralised regional financial system can restrain and slow down regional development in the long run. In this paper I would like to give an overview of the institutional and spatial structure and the development tendencies of the Hungarian banking which occurred during the first decade of two-tier banking. Allocation of branches of the banking institutions plays an important role, not only in the development of the national economy as a whole, but in the development of the local and regional economy, in innovation and, last but not least, in the organisation of production and service sectors. The elements of the banking network connect to regional development as the supply section of the business services therefore the density and the number of banks and their branches are an important indicator of regional economic development. The Hungarian banking system unlike its Polish counterpart is almost exclusively based on national branch-banking system, which means the lack of the regionally based independent universal banks. This very centralised structure of the national banking system and the growth of competition following the further liberalisation and decreasing barriers of the national market (e.g. cross-border banking and branching which primarily targeting corporate, but not the retail sector) might result to reduce credit availability for SMEs situated in the Hungarian regions remote from the capital city and from the European financial centres. In this respect, there may will be a case for creating regional banks in the forming regions of Hungary in order to protect local economy and facilitate to channel and mediate the EU regional development funds in the future. Larger countries in Europe (Germany, Poland, Italy etc.%29 show the rise of strong regional centres, based upon independent regional banks or decentralised back-office functions in certain provincial centres holding firm positions in large regional markets or based upon specialisation and complementarity. In contrast to this, the Hungarian banking exemplifies a pre-eminent position of the national financial centre partly due to Hungary’s much smaller market size and the weakness of the regional economies. It seems plausible that there is no place for such strong regional financial centres in a small domestic market and the small geographical areas of the created regions, but to find the right way of certain decentralisation in the banking sector is inevitable. The paper is organised as follows. After the introductory section the spatial and structural characteristics and polarisation of the Hungarian banking system is discussed in the light of its progress made in the last ten years. This is followed by an analysis of a possible reorganisation and decentralisation (regionalisation) of the spatial structure of banking at regional level without questioning the pre-eminent role of the national banking centre, but contributing to a more efficient operation of the network. In the last instance, I will raise the question becomes whether the national banking system is ready to be fully liberalised and able to withstand increasing competition (with the introduction of the cross-border banking) within the European Union. This analysis rests on data, which are usually published with certain delay, coming from the Annual Report of the Bank and Capital Market Advisory Board, Regional Statistical Yearbook and from the Hungarian Almanac of Financial and Capital Markets. Most of these sources as well as publication in economics still neglect to consider geographical issues of the financial sector making more difficult the research efforts. From the geographical point of view, to survey the rapidly changing banking network in expansion phase make rather difficult to demonstrate accurate spatial structure of banking services.

Innovation network building in the Hungarian region of South Transdanubia

The economic attraction of the regions depends on the spatially balanced network-based co-operation of different research bases, SMEs and organisations involved in innovation development these days. The research on regional innovation examines the correlation between regional innovation development, innovation potential and the innovation networks. This study summarises the research trends on the innovation network theory and introduces experiences of the European network building in order to gain best practice in the introduction of network-oriented regional innovation development for the Hungarian region of South Transdanubian . After the introduction of the innovation endowments of the region I discuss the database of the potential network actors and organisations, the possible phases of the regional network building and the preparatory works of the regional innovation strategy under implementation.

Future Bangalores? The increasing role of Central and Eastern Europe in the global services offshoring market: evidence from trade statistics

Many Central and Eastern European countries invigorated by EU enlargement became important locations for offshored service centres. Building on the region’s nearshoring advantages such as geographical-cultural proximity and on its multilingual graduate supply, CEE is likely to utilise more value added and quality-driven services. Trade statistics support the assumption that an expanding export in other business and ICT services has been associated with offshoring services in the six NMS analysed in detail in the paper. The service export data adopted from the Balance of Payments statistics gives a good approximation to indentify those sections of service trade, which can be regarded as offshorable. The paper summarises the additional factors favouring nearshoring (as in CEE locations) over offshoring (e.g. India) and lists several factors besides size why CEE countries cannot outpace India’s market potential.offshoring; nearshoring; service trade; balance of payments statistics; offshorable services; Central and Eastern Europe; new member states; India; offshoring advantages

Relocation of business services into Central and Eastern Europe: (evidence from trade and location statistics)

Relocation of business service offshoring-related activities measured by foreign direct investments and exports in services have grown rapidly after the Millennium in the new EU member states of Central and Eastern Europe (CEE). Besides Foreign Direct Investment (FDI), trade statistics support the assumption that an expanding export in business and in ICT services has been associated with relocation of shared services centres created by FDI in the six new member states (NMS). The service export data collected between 1996/2002 and 2012 gives a good proxy to identify those segments of service trade, which are considered to be offshorable. The paper examines the additional location factors selecting Central and Eastern European locations and summarises the effect of crisis on this industry. It concludes that the sector has demonstrated market resilience in the NMS and continued to expand rapidly

GlyphoganClassic hatása erdei béka (Ranadalmatina) ebihalak túlélésére csúcsragadozók jelenlétében

A GlyphoganClassic egy széles körben használt gyomirtó szer, ami mérgező lehet ebihalakra nézve, ugyanakkor korábbi vizsgálatok szerint hasonló morfológiai elváltozásokat okozhat, mint egyes ragadozók jelenléte. Ezen indukált fenotípusok ebihalak túlélésére gyakorolt hatása jórészt ismeretlen. Vizsgálatomban arra a kérdésre kerestem a választ, hogy a szer miként hat erdei béka (Ranadalmatina) ebihalak túlélésére ragadozók jelenlétében. Az ebihalakat glifozát hatóanyagú gyomirtóés ketrecbe zárt ragadozók (Lissotritonvulgaris, Aeshnacyanea) jelenlétében / hiányában neveltem. Húsz nap elteltével lefotóztam az ebihalakat, majd a különböző kezelésekből származó ebihalak keverékét tiszta vizet vagy szerttartalmazó mezokozmoszokban szabadon úszó ragadozók mellé helyeztem. Egy nappal később a fotók alapján beazonosítottam az életben maradt egyedeket. Eredményeim szerint azon ebihalak, amelyek nevelési környezetében volt ragadozó, nagyobb arányban éltek túl szabadon úszó ragadozók mellett, mint a naív ebihalak. A gyomirtószernem hatott az ebihalak túlélésére, bár a szert tartalmazó vízben nevelkedett ebihalakat nagyobb arányban sebesítették meg a ragadozók. Eredményeim nem támogatják azt a feltételezést, hogy a szer-indukált fenotípusos válasz védelmet jelent az ebihalak számára, ugyanakkor alátámasztják azt az általánosabb hipotézist, miszerint a természetbe kijutatott szennyező anyagok közvetlen hatásaik mellett közvetetten is befolyásolhatják az élőlények túlélési esélyeit

A régiók és az állam konfliktusai az innovációs kormányzásban - Az innováció központi és regionális irányítása Magyarországon

The paper deals with the evolving systems of central and regional govemance of innovation during the past two decades in Hungary. It examines the management of innovation, the organizational structure and institutions of innovation policy placing innovation in the development strategies of central governments. It discusses the reasons why the fully decentralised systems of regional innovation has not developed and what led to the weakening the regional innovation systems despite once the groundbreaking legistlation

Development of international financial centres in Central and Eastern Europe during transition period and crisis: The case of Budapest

This paper examines the development of international financial centres (IFC) in Central and Eastern Europe (CEE). The study argues that the development of the financial services in CEE is characterized by external dependency, which is manifested in the form of hierarchical command and control functions over CEE financial subsidiaries within the West European IFC network. The paper quantitatively compares the factors of IFC functions of Budapest in comparison to those of Warsaw and Prague. It argues that despite the lack of market evidence showing signs of a regional-centre focus during the transition period, there are some signs of IFC formation. The paper assesses the uneven impact of the global economic crisis upon CEE financial centres and confirms that their development trajectories became more differentiated as a result of the crisis. The steady decline of Budapest during the second half of the 2000s was accompanied by the rise of Warsaw. Our analysis concluded that Budapest, despite its earlier endeavours, most likely lost the competition to become an international financial centre

A pénzügyi piacok földrajzi dimenziói: A pénzügyi földrajz frontvonalai és vizsgálati területei

The combination of financial and geographical analyses is a new and promising trait in the literature of geography. the paper gives an overview on the birth of financial geography as an established subdiscipline of earth Sciences and introduces the main topical issues in financial geographical research. it highlights the decisive role of geographical distance in accessing soft and confidential information and shows that, by the same token, from greater distances only hard and public information is accessible. therefore non-standardised information with tacit knowledge continues to be concentrated in a few centres. the value of the information generated there decreases by distance. the paper examines the main factors of spatial concentration and deconcentration (dispersions) of financial markets. It argues, that the fragmentation involved in the trans-nationalisation of financial activities does not affect the controlling-power positions of traditional financial centres. the last part of the paper examines the role of the spatial distribution of financial institutions in geographical disparities and their role in economic development. The paper argues that, the integrative nature of financial geography contributes to overcome the previous shortcomings in disciplinary and methodological limitations in financial market related research. financial geography is able to resolve the two most important contradictory features of financial globalisation, namely its relativising effect on geographical distance, on the one hand, and the growing importance of geographical effects on financial markets and their agglomeration, on the other