Development of Financial Markets in Central Europe: the Case of the CE4 Countries

Author/Editor: Adarov, Amat ; Tchaidze, Robert
Publication Date: May 01, 2011
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: Financial markets in the CE4 countries are still shallow compared to other advanced EU countries. While the government bond markets are comparable in size, measured by capitalization in percent of GDP, the private bond, private credit, and equity markets lag behind. Empirical analysis in this paper helps identify factors that explain this phenomenon. We find that the observed differences cannot be explained by macroeconomic variables only, but incorporating indicators of institutional development and external funding eliminates the gap in the case of the equity and private credit markets. However, for the private bond market a significant gap remains even after accounting for these factors.
Series: Working Paper No. 11/101
Subject(s): Access to capital markets | Capital markets | Czech Republic | Europe | European Economic and Monetary Union | Financial sector | Hungary | Poland | Slovak Republic

Author's Keyword(s): financial development | capital markets
Publication Date: May 01, 2011
Format: Paper
Stock No: WPIEA2011101 Pages: 33
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