Jennifer Foo, Ph.D., Finance Departament, Stetson University, 421 N. Woodland Blvd., Deland, FL FL 32723 and Dorota Witkowska, Ph.D., Dept. of Econometrics & Statistics, Warsaw University of Life Sciences, ul. Nowoursynowska 166, Warszawa, 02-787, Poland.
Banking systems in transition countries in Europe have undergone two decades of market transformation. The future convergence with old Europe is expected where new and old Europe is undistinguishable. How imminent depends on the economic and financial market convergence, in particular, the banking development in supporting the economic convergence. This paper analyzes the development and performance of the banking systems after two decades of transition. Conclusions from early studies may no longer be valid due to the unprecedented progress made by transition countries today. Using data from EBRD, describing transformed economies in years 1995 – 2004, and multivariate statistical analysis methodology, we investigate the current banking performance in 10 transition Eastern and Central European countries. In particular, to what degree has banking sectors developed and performance improved for the new EU members and other transition countries?