Eastern Europe is engaged in a massive programme of financial reform. This paper argues that while this programme has many desirable features, it has failed to address some of the most basic issues. These concern the relationship between the financial system and the enterprise sector, and the...

We discuss the relative merits of public and private ownership. Our starting point is the analysis of Hart, Schleifer and Vishny (HSV), who apply an incomplete contract framework to study the difference between private and public ownership. Our analysis departs from HSV’s model in two aspects....