Central European Banks and Stock Exchanges: Capacity-building and Institutional Development
IACCM International Association for Cross Cultural Competence and Management
Peter R. Haiss
WU Vienna University of Economics and Business; UniCredit Bank Austria; IES Vienna - Institute for the International Education of Students
Lucjan T. Orlowski
Sacred Heart University - John F. Welch College of Business; Halle Institute for Economic Research; Centre for Social and Economic Research (CASE)
Fordham University - Department of Economics
European Management Journal, Vol. 16, No. 4, pp. 431-446, August 1998
This paper analyses capacity building and institutional development in the banking and capital market sectors of formerly planned economies in Central and Eastern Europe. While the existing literature mostly addresses the specific situation of banks and capital markets in a particular country or for a few countries of the region only, this paper identifies common institutional and structural problems of all 10 Central European applicant countries for EU membership. Given the strong tendencies towards imprudent banking, the small size of the financial markets, asymmetric information, inadequate capitalization and insufficient supervision, privatization of the large former state owned banks may require strong equity involvement of foreign banks and international institutions like the European Bank for Reconstruction and Development (EBRD), which reduce the risk for foreign investors by providing guarantees and securing more reliable banking policies of the respective governments.
Keywords: transition, bank privatization, Central and Eastern European countries
JEL Classification: P21, P30Accepted Paper Series
Date posted: April 20, 2005
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