James Mitchell

Recapitalization of Banks in Transition Economies: Poland and Hungary in the New Market Economy James Mitchell

This book is as much about human behavior as it is about banking and economics. The technical aspects of bail-out policies, capital asset ratios, risk assessments, etc. are clearly outlined. But the key to successfully transitioning from a planned to a market economy, particularly in the banking sector, ultimately comes down to people. After decades of central planning, Central and Eastern Europe was fully in doctrinated with a mindset that was anathema to a liberal market economy. Nicholas Barr, a professor at the London School of Economics and an economist at the World Bank, aptly characterized the post-Soviet era as a trail of tears. He directly witnessed the absolute economic devastation that blanketed the former iron curtain in the 1990s. While elements of widespread pain are unavoidable in transition economies, there are approaches to change that can put financial systems on successful trajectories. Some of the best and brightest minds traversed the Atlantic to offer sage advice on financial economics. But at the end of the day, success or failure was ultimately driven by sticks and carrots. Finally, the lessons from this book are global in scope. One only has to remember the U. S. Savings & Loan debacle of the 1980s.