POLISH BANK CONSOLIDATION AND FOREIGN COMPETITION - CREATING A MARKET-ORIENTED BANKING SECTOR

The characteristics of the 19 largest Polish banks are presented and t he current structure of the banking sectors in Poland, Hungary, and th e Czech Republic are compared as background for analyzing Polish banki ng consolidation. After the political arguments are considered, an eco nomic case is made for creating larger domestic banking groups. The go vernment's consolidation proposal is analyzed and found to be insuffic ient to meet these political and economic objectives. A more comprehen sive consolidation plan is suggested. It is argued that, by combining consolidation with foreign competition, a market-oriented banking sect or can be created in Poland. (C) 1996 Academic Press, Inc.