Towards Universal Banking - Risks and Benefits for Transition Economies.

Universal banks in transition economies can potentially impose a better corporate control structure on the firms, they can be sources of long-term finance, and they can contribute to real sector restructuring. At the same time, universal banking causes conflicts of interest which are particularly pronounced for banks in transition economies. Improving the corporate governance of banks through privatization, the strengthening of banking supervision, and deposit insurance reform is thus the key to an efficient universal banking system.