FINANCIAL INTEGRATION AND FINANCIAL DEEPENING IN THE SELECTED EUROPEAN TRANSITION ECONOMIES

International financial integration of transition countries from the region of Central, Eastern and South�Eastern Europe suggests an interesting example of the relation between the overall macroeconomic performance and the changes in the height as well as the structure of the cross�border capital inflows and outflows. Structural changes, high economic growth and dynamic convergence toward the Western European countries stimulated the pressures on the domestic capital base of the transition countries. Current account and international investment position deficits that many of the European transition countries have experienced till the present days emphasize their role on the foreign markets as net debtors. In the paper we examine main trends in the international financial integration of the selected European transition economies (Bulgaria, the Czech republic, Romania and the Slovak republic). At the same time we explore the essential features of the financial deepening of the selected group of the countries. The objective is to identify the country specific aspects in the international financial integration and financial deepening as well as the potential linkage between them.