Focus on Transition

Editorial 
Recent Economic Developments
Developments in Selected Countries 
Janos Kun, Katrin Simhandl and Cezary Wojcik

Studies

The Financial Sector in Five Central and Eastern European Countries: An Overview 
Franz Schardax and Thomas Reininger
This paper mainly describes the development and the status quo of the financial sector and markets in five Central and Eastern European countries (Poland, the Czech Republic, Hungary, Slovakia and Slovenia). For all countries, the main findings on the banking sector and the structure of credit and deposits are: The majority of the domestic banking sector is foreign-owned; new net lending to the corporate sector by domestic banks is becoming less important in financing gross fixed capital investment; enterprise debt is increasingly foreign currency-denominated; in recent years domestic bank profitability was inadequate (except in Poland), while interest rate margins declined. Analyzing the capital markets, the authors find that equity markets are  dominated by foreign investors and thus show relatively high liquidity, but have not yet channeled sizeable new capital to the corporate sector. By comparison, local currencydenominated debt securities are not only the main pillar of public sector deficit financing, but also play a more significant role than equity markets in providing new financing to fund enterprises’ investments. While medium- and long-term cross-border loans are becoming increasingly important, the vulnerability of the economies to financial contagion and sudden sizeable outflows of foreign short-term or portfolio capital can still be considered low. 

Intraindustry Trade between the EU and the CEECs – The Evidence of the First Decade of Transition 
Jarko Fidrmuc
This paper discusses the determinants of the EU’s intraindustry trade with the OECD countries and the CEECs. Factor endowments turn out to be insignificant if additional explanatory variables are included. Market size and distance are the most important determinants of intraindustry trade. The estimations for the OECD countries are used to compute predictions for the EU’s trade with the CEECs. This approach is well suited to predicting the EU’s trade structure with Bulgaria, Estonia, Hungary and Slovakia. However, the shares of intraindustry trade are overestimated in Poland, Romania, Latvia and Lithuania, and underestimated in the Czech Republic and Slovenia. These deviations can be partly explained by the lack of structural reform. 


The Development of the Romanian and Bulgarian Banking Sectors since 1990 
Stephan Barisitz
This study describes, analyzes and compares the development of the Romanian and Bulgarian banking sectors since the onset of transition. Both countries are found to have had some similar fundamental experiences, which merits a comparative chronological approach divided into a few major periods. Initial transition was followed by aggravating banking problems accompanied in both countries by stop-andgo macroeconomic policies and sluggish structural reforms. The accumulation of problems led to full-blown banking crises in Romania as well as Bulgaria, although the immediate causes differed, as did the effects on the respective economies. Bulgaria experienced its banking calamity from 1996 to 1997; Romania went through its crisis in the period between 1997 and 1999. The authorities’ economic policy responses varied substantially. Bulgaria introduced a currency board regime and took tough restructuring measures, which appear to have yielded better results than more hesitant action in Romania.

OeNB Activities
Vienna Seminar on the Accession Process - Doris Ritzberger-Grünwald
Lectures organized by the Oesterreichische Nationalbank
Presentation of the EBRD’s Transition Report 2000 – Martin Raiser 
The Current Problems of Macroeconomic and Structural Policies in Croatia – Hans Flickenschild 
Bosnia and Herzegovina: Economic Consolidation by Reform? – Wolfgang Petritsch 
The Challenges of Financial Stability – Josef Tosovsky
Wage Convergence before and after EU Accession: Economic Foundations, International Experience and Possible Scenarios for Hungary – Janos Gacs 
The "East Jour Fixe" of the Oesterreichische Nationalbank – A Forum for Discussion 
The Macroeconomic Dimension of Enlargement – Andries Brandsma 
How to Reduce Inflation: An Independent Central Bank or a Currency Board?
The Experience of the Baltic Countries – Jakob de Haan 
The Macroeconomic Effects of EU Enlargement for Old and New Member States – Fritz Breuss 
The "East Jour Fixe" of the Oesterreichische Nationalbank – A Forum for Discussion for Ten Years 
Olga Radzyner Award for Scientific Work on Monetary and Finance Themes
for Young Economists from Central, Southeastern and Eastern European
Transition Economies – Invitiation to Submit Applications 
Technical Cooperation of the OeNB with Central and Eastern European Transition Countries 

Statistical Annex
Compiled by Andreas Nader
Gross Domestic Product 
Industrial Production 
Unemployment Rate 
Consumer Price Index 
Trade Balance 
Current Account 
Total Reserves Minus Gold 
Central Government Surplus/Deficit 
Gross External Debt 
Exchange Rate 
Official Lending Rate