ORGANIZATIONAL AND SECTORAL CHANGES IN TRANSITION BANKING: ESTONIAN EXPERIENCE
ORGANIZATIONAL AND SECTORAL CHANGES IN TRANSITION BANKING: ESTONIAN EXPERIENCE

Summary/Abstract: Our study examines organizational and sectoral developments in the Estonian banking sector. It can be concluded that despite the unstable economic and legal environment during the transition period, banking in Estonia has been much more profitable than in many developed countries. But at the same time the effectiveness of banking in a transition economy is volatile and the risk of bank failures is high. The Estonian banking sector is clearly dominated by foreign banks that have brought stability and modern banking techniques with them and increased the competitiveness of the market. We also prove that new electronic channels are more cost-effective than traditional channels and explain the difference in the cost structure.

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