Management And Development Of Financial Systems In Eastern European Countries

Financial industries in central, eastern and south-eastern Europe have undergone dramatic changes over the past decade. Foreign direct investment contributed to the development of market-oriented banking and financial systems able to support the rapid pace of economic growth in these countries. Policymakers, academics and private sector analysts have contributed to this volume with their stimulating insights on a broad range of issues, from recent credit booms to the cross-border integration of banking and capital markets. Anyone who wants to understand how finance, growth and financial stability interact in transition economies should read this book. Mario Draghi, Governor of the Banca d Italia and Chairman of the Financial Stability Forum This book highlights the achievements and challenges of the ongoing process of financial integration in Europe. The financial integration of Europe is both welcomed as an economic driving force and watched with concern as a source of potential stability. After all, changing financial, regulatory and corporate ownership structures are fuelling competition, capital mobility and financial intermediation, but at the same time creating new systemic risks. With a special focus on Central, Eastern and South-Eastern Europe, the contributors to this book explore a wide spectrum of underlying issues, including the finance-growth nexus, credit boom patterns, the implications of foreign bank entry modes, lessons learned from old EU member states and commercial bank strategies. Authoritative views from central bank officials and policymakers are complemented with a special focus on empirical and econometric evidence from academia as well as practical insights from key financial market players. This unique collection will be of great interest to economists and experts in the fields of financial markets and European integration from central, commercial and investment banks, governments, international organizations, universities and research institutes.

The papers collected in this volume are those presented at the seventeenth Collo quium arranged by the Societe Universitaire Europeenne de Recherches Financieres (SUERF), which took place in Berlin in October 1992. The Society is supported by a large number of central banks and commercial banks, by other fmancial and business institutions and by personal subscriptions from academics and others interested in monetary and fmancial problems. Since its establishment in 1963, it has developed as a forum for the exchange of information, research results and ideas among academics and practitioners in these fields, including central bank officials and civil servants responsible for formulating and applying monetary and financial policies, national and international. A major activity of SUERF is to organise and conduct Colloquia on subjects of topical interest to its members. The titles, places and dates of previous Colloqu~ for which volumes of the collected papers were published are noted on the last page of this volume.

It is now ten years since the former Soviet Union collapses and the countries of Europe and Central Asia abandoned central planning. Enough experience has accumulated to allow a more reflective study of the transition period. One of the most critical elements of the transition to a market-based economy has been the establishment of the institutions and markets that constitute a financial system. This book examines financial transition through the lens of flow of funds accounts. These accounts have been used in the OECD countries for many years as an aid in analyzing money flows around their financial systems. This is the first time, however, that an attempt has been made to interpret financial transition from this perspective and it has yielded what the authors consider to be new, useful insights into the processes. The book reviews the evolution of financial systems in eight transition countries: Estonia, Hungary, Kazakhstan, Latvia, Lithuania, Poland, Russia, and Romania. Each chapter draws upon a flow of funds analysis to illuminate the relationship between macroeconomic performance and the evolving pattern of financial flows through the emerging markets and institutions. The introductory chapter discusses the nature of the flow of funds approach and its applicability to transition economies, while another chapter compares and contrasts the macroeconomic and financial performances of the eight countries by focusing on the orientation of sectoral imbalances within each economy and the nature of financing flows associated with them. Contents:The Flow of Funds in a Transition Context (A E Fleming & M M Giugale)The Evolution of Financial Systems in Eastern Europe and Central Asia: An Overview Through the Lens of the Flow of Funds (M M Giugale & A E Fleming)Kazakhstan — Financing Imbalances in a Resource Rich Economy (J Dawson & S Everhart)Romania — Dealing with the Twin Deficit (S J Peachey)Hungary — Tapping Resilient Household Savers (A Kerekes)Russia — A National Unwillingness to Pay for Government (J A Holsen)Estonia — When the Problem is the Private Sector (S J Peachey)Latvia — Finely Balanced for Growth (S J Peachey)Poland — Toward a Sustainable Financing Structure (W M Orlowski)Lithuania — The Persistent Dependency on the State (J Dawson & S Everhart) Readership: Policymakers, practitioners and academicians dealing with economic development, finance and transition issues. Keywords:

Covers the different ways in which financial systems have changed and been developed in Central and Eastern Europe during the recent upheavals and collapse of communism. Banking is examined in the protomarket period; for independence in the transitional economies; and in liberalization.

The countries of Central and Eastern Europe have been through a profound transition process for more than a decade now. The financial sectors and markets in the region have been subject to major structural reforms including privatization, liberalization and the acquisition by foreign banks of controlling interests in local financial institutions. This important new book includes papers that chart this process. Topics discussed include the implications of future EU membership, and the strategies pursued by the World Bank and International Monetary Fund.

Enhance your understanding of the economic impact of rapid political changes in Eastern Europe with the valuable insights in this provocative book. Wealth Creation in Eastern Europe examines the difficulties faced by Eastern European nations converting from economic systems based on public ownership and non-market mechanisms for allocating goods and capital, to systems based on private ownership and reliance on market prices for allocating resources. Authoritative contributors bring to light a variety of perspectives to financial management in this rapidly changing environment. Important topics covered by this useful book include a macroeconomic view of the problems created by German unification, difficulties caused by applying standard valuation models and techniques to Eastern European enterprises, and the reaction of Western financial markets when companies announce joint venture investments in Eastern Europe. Readers will find valuable insights into critical financial concerns in Eastern European countries on such subjects such as the difficulty of ascertaining the value of state enterprises and determining whether their continued existence makes economic sense the problems created by the absence of clear titles to property and business for reorganizing economic activity under private ownership the need for a legal system that recognizes rights by ownership and enforces contract law the difficulties caused by the virtually complete absence of accounting-based information and information systems needed to evaluate organizations’economic efficiency problems encountered when conferring social legitimacy on a capitalist private enterprise system after decades of indoctrination about the evils of capitalism

Potential new entrants to the European Union from Central and Eastern European countries face many challenges to achieve financial convergence with the existing EU nations. Using detailed case studies from Bulgaria, the Czech Republic, Latvia, Lithuania and Poland and analysis of cross country data from these regions, Financial and Monetary Integration in the New Europe looks at the key issues for applicant countries as they negotiate the terms of their membership in the European Union. Of major concern to these countries is the financial sector and its implications for economic growth and the conduct of macroeconomic policy. The book examines, in particular, monetary and exchange rate policies, banking regulation and financial market efficiency. The overall impact of building a market driven financial system on economic development is also explored.