Political Interests and the Emergence of Commercial Banking in Transition Economies*

Abstract

abstract This paper examines how interactions between government agencies and banking organizations led to the emergence of commercial banking in the Czech Republic and Hungary during the 1990s. We rely on interviews with bank managers at six large banks, government officers, and experts at other organizations to learn how actions based on different political ideologies shaped the banking field. We integrate prior research on institutional change, political interest, and transition economies to describe the emergence of commercial banking. Three important problems characterized commercial banking in the two countries: the disposal of bad loans, the privatization of banks, and the establishment of banking services. We argue that the solutions to these problems based on the changing political interests of organizational actors and regulators represent the phases of institutional development in commercial banking during the 1990s. Implications of our research are discussed regarding the political perspective of organizational fields in transition economies.