The liberalisation of the banking sector in the Czech Republic (and the former Czechoslovakia) has proceeded at a rapid pace since the collapse of the socialist regime in 1989. The initial separation of commercial banking activities from the central bank was followed by the partial privatisation of three of the four new institutions created as a result. At the same time new privately owned banks were encouraged to enter the market. Over the last two years, however, a number of bank collapses have adversely affected the sector with twelve of the newly created banks coming under the forced administration of the central bank._The authorities responded, initially, to this by refusing to grant licences for any new banks. This action has recently been relaxed but it has been replaced by a more rigorous regulatory regime which clarifies and strengthens the supervisory activities of the authorities. The explanations proposed for these problems have focused on mismanagement in the banks which has led to a growing proportion of bad loans in banks' portfolios and fraudulent activity which resulted in funds being appropriated by the owners or management of the institutions. The aim of this thesis is to examine, in more detail, these two sets of explanations. A review of banking development is undertaken which highlights both the favourable circumstances under which financial reform has been conducted as well as the inherent problems, such as the high initial level of non - performing loans and the inadequate regulatory framework. It will be concluded that the conditions necessary for fraudulent activity to be viable were apparent and this reason can be used to explain a number of the bank collapses which have occurred. The thesis will also examine the pattern of credit allocation and the implications which arise from the process of credit screening by banks. This part of the analysis will contain both quantitative and qualitative evidence. The latter consists of a series of interviews with bank officials with the aim of identifying, precisely, the nature of the process of credit screening in a sample of banks with differing characteristics. The thesis will conclude that the development of the regulatory environment has not kept pace with the rapid expansion of the banking sector. In addition, serious flaws in the credit screening processes adopted by many banks implies that the problem of non - performing loans in bank portfolios may become more serious.
| Identifer | oai:union.ndltd.org:bl.uk/oai:ethos.bl.uk:339821 |
| Date | January 1997 |
| Creators | Gower, Paul William |
| Publisher | University of Sussex |
| Source Sets | Ethos UK |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
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