Promoting domestic bank ownership in Central and Eastern Europe : a case study of economic nationalism and rent-seeking in Hungary

Abstract

This article provides an examination of the reasons for recent government-promoted bank ownership changes in Hungary. The two-pronged qualitative analysis shows that developments in Hungary serve private interests without benefiting a broader coalition to boost domestic economic growth. The government politicises bank ownership in both a nationalist and a developmentalist manner; however, the re-distribution of ownership and the discretion over loan allocation benefits a group of actors unified not by their capacities to boost domestic development but their unequivocal loyalty to the government. In addition to equity concerns, these developments may well introduce considerable risk into the Hungarian banking sector.