Banking in transition

STUDIES OF THE PROCESS of transition from plan to market emphasise the central importance of establishing a competitive capital market, and in particular an independent commercial banking system (see e.g. Fischer & Gelb (1990), McKinnon (1991)). In this paper we offer a detailed study of the development of the commercial banking system in the country where reforms in this area are most advanced, Hungary. We find that considerable progress has been made in establishing an independent commercial banking system in Hungary since 1986 and that, despite political interference, competitiveness has increased considerably, in no small part because of foreign involvement. We also provide an explanation of some important phenomena in the transition of the banking system-queuing, bad debts and high profitability. Although our discussion is restricted to the Hungarian case, the issues involved seem likely to apply in all the reforming economies (as is implied, for instance, in Hanley et al. (1991))

Business · Debt · Economic system · Economics · Economy · Financial system · Industrial organization · International economics · Market economy · Profitability index · Transition (genetics · Banking stability, regulation, efficiency · Corporate Finance and Governance · Finance · Global Financial Crisis and Policies

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