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Corporate Governance in Bulgarian State-owned Banks, 1992-1997

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  • Sonya Dilova-Kirkowa

Abstract

Among the problems faced by Bulgarian state-owned banks, one can distinguish their poor corporate governance. The latter is analysed in three dimensions, namely ownership and organisational structures, and bank involvement in enterprise restructuring. Unclear delineated property rights and postponed banking privatisation enforced political interference in institutions responsible for managing state-ownership, thus alleviating the transparency of their activities. Exogenously imposed rules of financial intermediation, including forced mergers, seemed to take some time before yielding positive results. But their negative impact was almost immediate, which reflected in deteriorating financial performance of state-owned banks. We argue that the equity structure of state-owned banks determined their investment operations, while deposits from non-financial sector were widely used for refinancing banking sector. It is questionable whether state-owned banks could be regarded as sound in 1992-97, given a lack of proper provisioning till 1996. Both profitability and efficiency ratios of studied five state-owned banks indicated the anticipated problems.

Suggested Citation

  • Sonya Dilova-Kirkowa, 1999. "Corporate Governance in Bulgarian State-owned Banks, 1992-1997," Post-Communist Economies, Taylor & Francis Journals, vol. 11(2), pages 253-265.
    • Handle: RePEc:taf:pocoec:v:11:y:1999:i:2:p:253-265
    DOI: 10.1080/14631379996011
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    1. Colin Mayer, 1998. "Financial Systems and Corporate Governance: A Review of the International Evidence," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 154(1), pages 144-144, March.
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    1. Nedelchev, Miroslav, 2010. "Корпоративно Управление На Финансови Групи (Спазвай И Обяснявай) [Corporate Governance of Financial Groups (Comply and Explain)]," MPRA Paper 52249, University Library of Munich, Germany.
    2. Sébastien Charles & Jonathan Marie, 2016. "Hyperinflation bulgare de 1997 : transition, fragilité bancaire et change," CEPN Working Papers 2016-13, Centre d'Economie de l'Université de Paris Nord.
    3. Sébastien Charles & Jonathan Marie, 2017. "Bulgaria’s hyperinflation in 1997: transition, banking fragility and foreign exchange," Post-Communist Economies, Taylor & Francis Journals, vol. 29(3), pages 313-335, July.

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