Financial System Design for Formerly Planned Economies: Defining the Issues

96 Pages Posted: 11 Nov 2008

See all articles by Gregory F. Udell

Gregory F. Udell

Indiana University - Kelley School of Business - Department of Finance

Paul Wachtel

New York University - Stern School of Business

Date Written: December 1994

Abstract

The formerly planned economies (FPEs) of Eastern Europe and the former Soviet Union are a rather disparate group of nations with widely differing financial structures. In some of the countries of Eastern Europe the financial infrastructure is beginning to assume the characteristics that are found in the West. In other instances, the very institutions of a functioning financial system hardly exist. Thus, the tasks faced by policy-makers in these countries can vary from the reform of existing institutions to the creation of brand new ones. However, in all instances it is important to focus on the steps that must be taken to develop the financial institutions with the incentive structure for efficient capital market allocations and the provision of a stable payments mechanism, as well as the mechanisms for the conduct of monetary policy. In this paper we will outline the issues and problems faced by the financial sector in the transition from a planned to a market economy.

Suggested Citation

Udell, Gregory F. and Wachtel, Paul, Financial System Design for Formerly Planned Economies: Defining the Issues (December 1994). NYU Working Paper No. FIN-94-050, Available at SSRN: https://ssrn.com/abstract=1299496

Gregory F. Udell (Contact Author)

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States

Paul Wachtel

New York University - Stern School of Business ( email )

44 West 4th St.
New York, NY 10012
United States
212-998-4030 (Phone)
212-995-4218 (Fax)

HOME PAGE: http://www.stern.nyu.edu/~pwachtel

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