Working Paper: CEPR ID: DP603
Authors: Jenny Corbett; Colin P. Mayer
Abstract: Eastern Europe is engaged in a massive programme of financial reform. This paper argues that while this programme has many desirable features, it has failed to address some of the most basic issues. These concern the relationship between the financial system and the enterprise sector, and the association suggests that there is a choice between financial systems that has not as yet been adequately considered and that it is far from evident that Eastern Europe is at present proceeding with the right model.
Keywords: financial reform; Eastern Europe; banking system; capitalism; privatization
JEL Codes: G21; P34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| financial reform in Eastern Europe (P34) | restructuring of the non-financial enterprise sector (L52) |
| banking reform (G28) | restructuring of the enterprise sector (P31) |
| absence of large shareholdings in the UK and US (G39) | free-rider problem in corporate control (G34) |
| insider systems of Germany and Japan (P19) | banks exert control over firms (G21) |
| current push for stock market development and privatization (O16) | overlooks importance of establishing internal control structures (G38) |