Comparing Financial Systems. Problems of Information and Control in Economies in Transition

Article describes Central and East European Countries (CEEC) in which in the absence of capital market the performance of enteprises was determined by real variables, financial flows being adjusted to real flows. The lack of a full fledged financial system has often been identified as one of the main weaknesses of centrally planned economies. Described is looking for an appropriate model of a financial system by the managers of transition who are inevitably confronted with the diversity of contemporary institutional arrangements in this domain. Therefore, echoing western discussion there is a budding debate in CEEC about the relative role of the stock market and of the banking system in financing investment and controlling management. In the article is also shown the particular situation of the countries in transition in order to draw some conclusions about the desirability and feasibility of different institutional arrangements and finally presented the actual evolution of financial systems in CEEC from the viewpoint of the relationship between banks and industry: it seems indeed that banks are playing an increasingly important role and that very close links are developing between the banking and the industrial sectors. The arguments pro and con such involvement are discussed not in terms of an "optimal" model, which remains obscure, but from the viewpoint of the medium term objectives of transformation.