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Designing Financial Systems in Transition Economies: Strategies for Reform in Central and Eastern Europe

Editor

Listed:
  • Anna Meyendorff
    (ApplEcon)

  • Anjan V. Thakor
    (Washington University in St. Louis)

Abstract

This collection examines the design of financial systems for central and eastern European countries engaged in the transition to market-based economies. It highlights the need for better approaches to measuring performance and providing incentives in banking and for financial mechanisms to encourage private-sector growth. Written by leading European and North American scholars, the essays apply modern finance theory and empirical data to the development of new financial sectors. Two broad themes emerge. The first is the critical relationship between reforms in the financial sector and in the real economy. Lending policies, which have a significant impact on business performance, need to discourage bad firm performance without prematurely liquidating potentially profitable enterprises. Conversely, the quality of firms influences the financial sector. If banks cannot find good credit risks, they cannot improve the quality of their portfolios. Until a critical mass of viable firms is built, equity markets will not develop sufficiently. The second theme is that the lack of fully developed markets and institutions may distort the policy outcomes predicted under models based on fully developed economies. Reliance on these models may therefore be inappropriate for transition economies.

Suggested Citation

  • Anna Meyendorff & Anjan V. Thakor (ed.), 2002. "Designing Financial Systems in Transition Economies: Strategies for Reform in Central and Eastern Europe," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262133911, December.
    • Handle: RePEc:mtp:titles:0262133911
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    Citations

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    Cited by:

    1. Ichiro Iwasaki & Satoshi Mizobata & Alexander Muravyev, 2018. "Ownership dynamics and firm performance in an emerging economy: a meta-analysis of the Russian literature," Post-Communist Economies, Taylor & Francis Journals, vol. 30(3), pages 290-333, May.
    2. Song. Fenghua & Thakor, Anjan, 2013. "Notes on financial system development and political intervention," Policy Research Working Paper Series 6350, The World Bank.
    3. Manthos D. Delis & Philip Molyneux & Fotios Pasiouras, 2011. "Regulations and Productivity Growth in Banking: Evidence from Transition Economies," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(4), pages 735-764, June.
    4. Brucker, Herbert & Schroder, Philipp J.H. & Weise, Christian, 2005. "Can EU conditionality remedy soft budget constraints in transition countries?," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 371-386, June.
    5. Iwasaki, Ichiro & Kočenda, Evžen, 2017. "Are some owners better than others in Czech privatized firms? Even meta-analysis can’t make us perfectly sure," Economic Systems, Elsevier, vol. 41(4), pages 537-568.
    6. Emilio Colombo & Luca Stanca, 2003. "Investment Decisions and the Soft Budget Constraint: Evidence from Hungarian Manufacturing Firms," Working Papers 68, University of Milano-Bicocca, Department of Economics, revised Dec 2003.
    7. Karel Janda, 2004. "Bankruptcy Procedures with Ex Post Moral Hazard," Working Papers IES 61, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2004.
    8. Rainer Haselmann & Katharina Pistor & Vikrant Vig, 2010. "How Law Affects Lending," The Review of Financial Studies, Society for Financial Studies, vol. 23(2), pages 549-580, February.
    9. Nivorozhkin, Eugene, 2004. "Financing choices of firms in EU accession countiries," BOFIT Discussion Papers 6/2004, Bank of Finland, Institute for Economies in Transition.
    10. Ichiro IWASAKI & Satoshi MIZOBATA, 2018. "Post-Privatization Ownership And Firm Performance: A Large Meta-Analysis Of The Transition Literature," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(2), pages 263-322, June.
    11. Nivorozhkin, Eugene, 2005. "Financing choices of firms in EU accession countries," Emerging Markets Review, Elsevier, vol. 6(2), pages 138-169, June.
    12. Richard Estes, 2007. "Development challenges and opportunities confronting economies in transition," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 83(3), pages 375-411, September.
    13. Karel Janda, 2009. "Bankruptcies With Soft Budget Constraint," Manchester School, University of Manchester, vol. 77(4), pages 430-460, July.
    14. Emilio Colombo & Luca Stanca, 2006. "Investment decisions and the soft budget constraint," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 14(1), pages 171-198, March.
    15. Ichiro Iwasaki & Satoshi Mizobata, 2020. "Ownership Concentration and Firm Performance in European Emerging Economies: A Meta-Analysis," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(1), pages 32-67, January.
    16. Dietrich Earnhart & Lubomir Lizal, 2010. "Effect of Corporate Economic Performance on Firm-Level Environmental Performance in a Transition Economy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 46(3), pages 303-329, July.
    17. repec:zbw:bofitp:2004_006 is not listed on IDEAS
    18. Gerald A. McDermott, 2004. "The Politics of Institutional Learning and Creation: Bank Crises and Supervision in East Central Europe," William Davidson Institute Working Papers Series wp726, William Davidson Institute at the University of Michigan.

    More about this item

    Keywords

    Central Europe; Eastern Europe; transition economies;
    All these keywords.

    JEL classification:

    • P21 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Planning, Coordination, and Reform

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