A Transformation Model for Banking Systems in Transition Economies

In a number of transition economies the banking systems are at different stages of the transformation process from mostly planned to market economy structures. But the past turbulent year led to further distinctions in development within these countries. While FSU (the former Soviet Union) countries, in particular Russia, were deeply shattered by the SouthEast Asian financial crisis and have suffered a set-back in the transition process, other more advanced Central European countries have shown resistance and have been able to keep macroeconomic stability. This paper presents a model for the description, analysis, explanation and forecast of the transformation processes in banking systems in Transition Economies. It is argued that the model will help avoid similar financial crises and other setbacks during the transition to market economy.