Real and Financial Sector Studies in Central and Eastern Europe: A Review

This survey focuses broadly on real and financial sector studies in former transition economies of Central and Eastern Europe. The survey shows that in the real sector there has been considerable trade and global integration in the post-transition period. Moreover, there is no uniform evidence regarding convergence or divergence from the surveyed empirical studies regarding business cycles in Central and Eastern Europe. Financial sector studies show that foreign bank ownership is associated with higher banking efficiency than in the case of domestic bank ownership and significant return and volatility transmission also from core European financial markets. However, the recent global financial crisis significantly affected these patterns. Finally, central bank communication seems to have significant wealth effects in financial markets and tends to reduce financial market uncertainty.