The Politics of Institutional Learning and Creation: Bank Crises and Supervision in East Central Europe

Gerald A. McDermott ()

No wp726, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: This article examines the political conditions shaping the creation of new institutional capabilities. It analyzes bank sector reforms in the 1990s in three leading postcommunist democracies – Hungary, Poland, and the Czech Republic. It shows how different political approaches to economic transformation can facilitate or hinder the ability of relevant public and private actors to experiment and learn their new roles. With its emphasis on insulating power and rapidly implementing self-enforcing economic incentives, the “depoliticization” approach creates few changes in bank behavior and, indeed impedes investment in new capabilities at the bank and supervisory levels. The “deliberative restructuring” approach fostered innovative, costeffective monitoring structures for recapitalization, a strong supervisory system, and a stable, expanding banking sector.

Keywords: Institutional change; transition economies; bank crises; bank supervision; learn (search for similar items in EconPapers)
JEL-codes: F02 G28 K23 P26 P48 (search for similar items in EconPapers)
Pages: pages
Date: 2004-11-01
New Economics Papers: this item is included in nep-fin, nep-law, nep-pol and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:wdi:papers:2004-726

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