This project investigates the efficiency of capital markets in the transition economies of Central Europe. Well functioning capital markets are of great potential importance to this region. Public trust that these markets are fair and not rigged in favor of insiders is important both in generating the capital needed for economic restructuring and in building support for market mechanisms and the sometimes painful steps involved in the transition. This research focuses on both the extent of efficiency in these developing markets and on how different choices with respect to privatization may have affected the working of the eventual capital market. In addition, it analyzes the workings of the artificial and self-contained capital market created by the Czech voucher privatization scheme. A series of studies will be undertaken which apply market techniques to emerging Central European capital markets. These techniques are similar to the ones used in the study of other markets including the emerging markets in Latin America and Asia. These studies will allow for a comparison of market structure and efficiency in markets that emerged rapidly following radical changes in economic structure with those that emerged more gradually or have had a long history of development. Insights will be obtained into the ability of various methods of privatization to promote or hinder well-functioning capital markets.
