The Financial and Banking Sectors in Transition Countries

Ideas and scenarios for economic reforms led to the transformation of a centrally planned economy into a market economy in Central European countries (CEC). Privatization, liberalization of prices, liberalization of foreign trade, and liberalization of capital movement were among the main pillars of transformation. The fulfilment of the transformation task was impossible without substantial changes in the banking sector. This chapter gives a brief overview of the development of the financial and banking sectors in the Czech Republic, the Slovak Republic, Hungary and Poland. In the first part, the key features of the financial sectors in these transition countries are identified. Then, by applying indicators of capital market and bank development, a comparison of the financial sector’s structure will be made. The third part will deal with the restructuring of the banking sector in transition economies.