Extract
The evolution of commercial banking in Estonia.
INTRODUCTION
Estonia regained its independence and emerged from the shackles of the Soviet rule in 1991. Estonia was an independent country from 1918 to 1941 and was under Soviet rule from 1941 to 1991. The smallest of the former Soviet Union Republics, it developed into a thriving free market economy in the remarkably short time since then. An important part of this economic revolution is the story of the evolution of the Estonian commercial banking industry that has developed into one of the most modern and competitive in the region. The first commercial bank in Estonia was actually licensed in 1988 and the early period was one of turbulence and financial crises. Despite this, the banking industry evolved and emerged as healthy, highly competitive institutions providing a range of consumer and commercial banking services on par with the best in the industrialized world. While the overall market size is small, the banks have modernized to a level seen in few countries and offer totally paperless banking. The primary factor behind this healthy evolution of the banks was the unique regulatory approach pursued by the central bank, Bank of Estonia (BOE), which served as the main regulatory authority during the first decade of the newly independent Estonia. The early years saw easy entry with very low share capital requirements and very limited regulations. The approach included some missteps, hand...See the full content of this document
