'State-Owned Banks in the Transition: Origins, Evolution, and
Policy Responses' reviews the experience with state banking over
the last decade in the transition economies of Europe and Central
Asia. State ownership of banking systems has undermined economic
reform efforts and has distorted emerging markets. This study
compares various approaches to reform and calls attention to the
significant costs associated with continued state ownership. It
concludes with lessons from experience and recommendations for
policymakers on approaches to reducing state ownership of banks in
the region. The findings indicate that restructuring of state banks
has proven time consuming and costly, and governments are better
off moving swiftly to privatize or liquidate their remaining state
banks rather than attempting to rehabilitate them. This report
includes seven case studies of individual state banks that have
been reformed or privatized over the past decade. The case studies
highlight the challenges of implementing various reform measures
and illustrate how such challenges have been addressed in difficult
economic and political contexts.
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