Important elements of the transactional structure that created and partially privatized Komercni Banka, the Czech Republic's largest commercial bank, include antecedent actions that determined the bank's management and established its commercial loan portfolio, a decision against splitting the bank's operations into smaller organizational units, the reliance on voucher privatization, and limited post-privatization financial support. The main feature, however, is the government's decision to retain control and majority ownership of Komer6nf. Our analysis of the bank's subsequent credit allocations yields evidence of the government's preference for a deliberate rather than a quick move toward market-driven decision-making. The opportunity to privatize a strong bank and harden enterprise-level budget constraints quickly was foregone, or at least postponed, in favor of creating a protected bank that would deal more leniently with Komercni's politically-vested commercial clients.
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Length: pages Date of creation: 01 Dec 1996 Date of revision: Handle: RePEc:wdi:papers:1996-6
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Find related papers by JEL classification: G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm P34 - Economic Systems - - Socialist Institutions and Their Transitions - - - Finance
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