BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 12/2008:
Banking in transition countries
John Bonin ()
, Iftekhar Hasan and Paul Wachtel
Abstract: Modern banking institutions were virtually non-existent in
the planned economies of central Europe and the former Soviet Union. In the
early transition period, banking sectors began to develop during several
years of macroeconomic decline and turbulence accompanied by repeated bank
crises. However, governments in many transition countries learned from
these tumultuous experiences and eventually dealt successfully with the
accumulated bad loans and lack of strong bank regulation. In addition,
rapid progress in bank privatization and consolidation took place in the
late 1990s and early 2000s, usually with the participation of foreign
banks. By 2005, the banking sectors in many transition countries had
developed sufficiently to provide a wide range of services with solid bank
performance. Recently, banks have switched their focus from lending to
enterprises in a somewhat underdeveloped institutional environment to new
collateralized lending to households, which accounts for much of the recent
growth of credit in many transition countries.
Keywords: transition banking; bank privatization; foreign banks; bank regulation; credit growth; (follow links to similar papers)
JEL-Codes: G21; P30; P34; P52; (follow links to similar papers)
34 pages, August 27, 2008
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