edited by Alexander E Fleming (The World Bank, DC, Washington) & Marcelo M Giugale (The World Bank, DC, Washington)

It is now ten years since the former Soviet Union collapses and the countries of Europe and Central Asia abandoned central planning. Enough experience has accumulated to allow a more reflective study of the transition period. One of the most critical elements of the transition to a market-based economy has been the establishment of the institutions and markets that constitute a financial system. This book examines financial transition through the lens of flow of funds accounts. These accounts have been used in the OECD countries for many years as an aid in analyzing money flows around their financial systems. This is the first time, however, that an attempt has been made to interpret financial transition from this perspective and it has yielded what the authors consider to be new, useful insights into the processes.

The book reviews the evolution of financial systems in eight transition countries: Estonia, Hungary, Kazakhstan, Latvia, Lithuania, Poland, Russia, and Romania. Each chapter draws upon a flow of funds analysis to illuminate the relationship between macroeconomic performance and the evolving pattern of financial flows through the emerging markets and institutions. The introductory chapter discusses the nature of the flow of funds approach and its applicability to transition economies, while another chapter compares and contrasts the macroeconomic and financial performances of the eight countries by focusing on the orientation of sectoral imbalances within each economy and the nature of financing flows associated with them.

• The Flow of Funds in a Transition Context (A E Fleming & M M Giugale)
• The Evolution of Financial Systems in Eastern Europe and Central Asia: An Overview Through the Lens of the Flow of Funds (M M Giugale & A E Fleming)
• Kazakhstan — Financing Imbalances in a Resource Rich Economy (J Dawson & S Everhart)
• Romania — Dealing with the Twin Deficit (S J Peachey)
• Hungary — Tapping Resilient Household Savers (A Kerekes)
• Russia — A National Unwillingness to Pay for Government (J A Holsen)
• Estonia — When the Problem is the Private Sector (S J Peachey)
• Latvia — Finely Balanced for Growth (S J Peachey)
• Poland — Toward a Sustainable Financing Structure (W M Orlowski)
• Lithuania — The Persistent Dependency on the State (J Dawson & S Everhart)