Banking sector (under?) development in Central and Eastern Europe

Juergen von Hagen and Valeriya Dinger

No B 06-2005, ZEI Working Papers from University of Bonn, ZEI - Center for European Integration Studies

Abstract: By introducing a new measure of the banking systems' size, the paper challenges the existing consensus on severe underdevelopment of the CEE banking sectors. We argue that the existing studies on the size of CEE banking systems exaggerate the real degree of underdevelopment because common measures of the size of the banking system produce downward biased results when applied to transition economies. We compare various measures of the size of the CEE banking sectors with those of several 'old' European Union (EU) member countries which are used as benchmarks. The comparison indicates that indeed the banking sectors in the CEE countries lag behind the most developed financial systems in the EU, but are very close to the levels in the financially less developed EU countries.

Keywords: financial intermediation; transition economies; banking sector's size (search for similar items in EconPapers)
JEL-codes: G21 P34 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zeiwps:b062005

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