Institutions, Financial Systems and Transformation

Governments have a substantial influence on the allocation of resources in setting the rules of the game of financial markets. However, up to now, institutional economics and the theory of financial markets are totally separated research areas. To close this analytical gap, our paper connects these two research areas by investigating the roles of the state as a player and a regulator of financial markets. In our empirical case-studies on the transformation process in Poland, Romania and Russia we are analysing the problems that arise from such an unclear definition of the role of the state