More than three years went past since the European Union has increased by eight new member states from Central and Eastern Europe. Among them, especially the Baltic States have reached recently high economic growth rates. In particular Latvia, which recorded the highest one (11.9% in 2006) in the whole European Union. Having regained their independence in 1991, after the breakdown of the Soviet Union, the three Baltic States might have developed after a more than 10- year continuing transformation- process of their economies, through self- confident countries with interesting investment opportunities for foreign investors. Since the independence of the three Baltic States was restored, all three countries were driven to replace the centrally planned, socialist system, forced by the Soviet Union through a structure based system on free market principles. A continuing order of political and economical events during the last two decades, and the contemporaneous developments in the financial markets, as well as the banking and insurance sector of the three Baltic states, upcoming changes in the course of onward globalisation, and the broadening unification in financial market regulation led to serious changes and demonstrated important milestones to liberalised market principles. The descriptive literature, which supported the present minithesis, describes only short periods of the developments in the Baltic financial markets. Moreover, you will not find a kind of evaluation about all three Baltic States in comparison to each other over such a long time period.
There are no current statements, which conclude this whole development- period among the three Baltic states and there is no clear assessment whether the Baltic states` financial markets can be considered as integrated or not. Therefore, this minithesis serves as an attempt to answer this main question.
Inhaltsverzeichnis (Table of Contents)
- 1. Introduction
- 2. General Economic Situation in Estonia, Latvia and Lithuania
- 3. The Financial Markets in the Baltic States
- 3.1 The Financial Sector
- 3.1.1 The Commercial Banking Sector in the Baltic States
- 3.1.2 The Insurance Market in the Baltic States
- 3.2 Foreign Exchange & Money Market in the Baltic States
- 3.2.1 The Baltic States on their Way to own Currencies
- 3.2.2 Money Market & Exchange Rate Policy
- 3.3 The Credit Market in the Baltic States
- 3.3.1 Credit Growth and General Conditions
- 3.3.2 Latvia by Way of Example
- 3.4 The Capital Market in the Baltic States
- 3.4.1 Stock Exchanges and Stock Market Indices
- 3.4.2 The Securities Market in the Baltic States
- 3.1 The Financial Sector
- 4. Exceptional Circumstances Affecting the Baltic States' Financial Markets
- 4.1 First Years after the Breakdown of the Soviet Monobank-System
- 4.2 Banking Crises between 1992 and 1995
- 4.3 The Russian Financial Crisis and its Effects on Baltic Economies
- 5. Financial Market Integration & Current Challenges in the Baltic Economies
- 5.1 Financial Market Integration & Recent EU Directives
- 5.2 Euro-Introduction
- 5.3 Critical View of Latvia's Current Economic Problems
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This minithesis aims to analyze the development of the financial markets in the Baltic States (Estonia, Latvia, and Lithuania) since the collapse of the Soviet Union and their transition to integrated financial markets. It seeks to assess whether these markets can be considered integrated and to identify key challenges and opportunities.
- Transition from a centrally planned monobank system to market-based financial systems.
- Economic growth and stability in the Baltic states.
- Development of various financial market segments (banking, insurance, credit, capital markets).
- Impact of external shocks (e.g., Russian financial crisis) on Baltic economies.
- Challenges and opportunities related to EU integration and the adoption of the Euro.
Zusammenfassung der Kapitel (Chapter Summaries)
1. Introduction: This chapter introduces the topic by highlighting the significant economic growth experienced by the Baltic states after regaining independence and the subsequent transition from a centrally planned economy to a market-based system. It emphasizes the lack of comprehensive analyses comparing the financial market development across all three states over an extended period, establishing the minithesis's goal of addressing this gap. The chapter outlines the structure of the work, promising an examination of general economic conditions, an in-depth analysis of financial market segments, an exploration of external shocks and crises, and a final assessment of EU integration's impact and the challenges faced.
2. General Economic Situation in Estonia, Latvia and Lithuania: This chapter provides an overview of the general economic conditions in the three Baltic States, focusing on key indicators such as GDP growth, inflation (consumer price growth), and the current account balance. Using tables presenting data from 2005-2007 (with 2007 data representing forecasts), the chapter highlights the impressive economic growth, particularly in Latvia. However, it also points to the high inflation rates and current account deficits, especially in Latvia, suggesting potential risks of an overheated economy. The chapter also presents data on unemployment rates, showing a steady decline across all three countries.
3. The Financial Markets in the Baltic States: This chapter delves into the structure and development of the financial markets in Estonia, Latvia, and Lithuania. It defines the financial system, outlining its constituent markets and institutions. The chapter presents a comparative analysis of the banking and insurance sectors, examining the foreign exchange and money markets, credit markets, and capital markets. It provides a detailed overview of the structure, evolution, and key characteristics of each market segment in all three Baltic states. The chapter lays the groundwork for understanding the subsequent analysis of the specific challenges and milestones encountered.
Schlüsselwörter (Keywords)
Baltic States, financial market development, economic transition, centrally planned economy, market integration, banking sector, insurance market, credit market, capital market, EU integration, economic growth, inflation, current account balance, Euro adoption, Russian financial crisis.
Frequently Asked Questions: Analysis of Financial Market Development in the Baltic States
What is the main topic of this document?
This document provides a comprehensive analysis of the development of financial markets in Estonia, Latvia, and Lithuania since the collapse of the Soviet Union. It examines the transition from a centrally planned economy to market-based systems, assesses the integration of these markets, and identifies key challenges and opportunities.
What are the key themes explored in the document?
The key themes include the transition from a centrally planned monobank system to market-based financial systems; economic growth and stability in the Baltic states; the development of various financial market segments (banking, insurance, credit, capital markets); the impact of external shocks (e.g., the Russian financial crisis) on Baltic economies; and the challenges and opportunities related to EU integration and the adoption of the Euro.
What specific financial market segments are analyzed?
The document analyzes the commercial banking sector, the insurance market, the foreign exchange and money markets, the credit market, and the capital market in the Baltic States. Each segment is examined in detail, including its structure, evolution, and key characteristics.
What is the scope of the geographic area covered?
The analysis focuses specifically on the three Baltic States: Estonia, Latvia, and Lithuania.
What time period does the analysis cover?
The analysis covers the period since the collapse of the Soviet Union, with specific data presented for the years 2005-2007 (with 2007 data representing forecasts).
What external shocks are discussed in relation to the Baltic economies?
The document discusses the impact of the Russian financial crisis on the Baltic economies and the initial years after the breakdown of the Soviet monobank system, including banking crises between 1992 and 1995.
What is the significance of EU integration and Euro adoption?
The document explores the challenges and opportunities presented by EU integration and the adoption of the Euro, examining their impact on the financial markets of the Baltic states. A critical view of Latvia's current economic problems in this context is also provided.
What is the overall conclusion or assessment of the Baltic financial markets' development?
While the document doesn't offer a single, concise conclusion, it aims to provide a thorough analysis of the development, integration, challenges, and opportunities in the Baltic financial markets, allowing the reader to draw their own conclusions based on the presented data and insights.
What are the key words associated with this document?
Baltic States, financial market development, economic transition, centrally planned economy, market integration, banking sector, insurance market, credit market, capital market, EU integration, economic growth, inflation, current account balance, Euro adoption, Russian financial crisis.
What type of data is used in the analysis?
The analysis utilizes various economic indicators such as GDP growth, inflation, current account balance, and unemployment rates, supplemented by descriptions of the structure and evolution of different financial market segments.
What is the purpose or objective of this document?
The document aims to analyze the development of the financial markets in the Baltic States since the collapse of the Soviet Union and their transition to integrated financial markets. It seeks to assess whether these markets can be considered integrated and to identify key challenges and opportunities.
- Quote paper
- Thomas Werner Schmitt (Author), 2008, From a centrally planned monobank system to integrated financial markets?, Munich, GRIN Verlag, https://www.grin.com/document/89005
