Banking on the Transition

Rodney Schmidt

Chapter 10 in Financial Reform in Developing Countries, 1998, pp 296-327 from Palgrave Macmillan

Abstract: Abstract In 1989–91 the centrally planned countries of Central and Eastern Europe (CEE)2 liberalized most prices and international trade. These and other transition reforms revealed how little the physical capital of state enterprises is worth in a market economy.3 The low value of the capital assets is due to investment inefficiency under central planning and the decline in the investment rate preceding the transition, the abrupt change in relative prices that initiated the transition period, and the discontinuation of external subsidies when the Soviet trade bloc collapsed.

Keywords: Monitoring Cost; Bank Credit; Bank Debt; Perverse Incentive; Economic Policy Research (search for similar items in EconPapers)
Date: 1998
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DOI: 10.1007/978-1-349-26871-9_10

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