Evolution of the banking system in Lithuania: from state-owned mono-banks to a modern banking system (1988-2004)

The article ends with conclusions. They state that (a) the formation of the Lithuanian banking system proves without doubt that the market economy is highly dependent on its institutional structure. This especially concerns the financial system which essentially impacts the regularity, stability and growth of the processes in the real economy. The heritage of the command economy in this field was the main factor which, in search of progress, brought the majority of banks in post-communist countries into the hands of foreign owners; (b) the first decade in Lithuania, as well as in many other post-communist countries, was the period of intensive and sometimes painful learning and experience accumulation, both in the creation of a totally new economic system and in building its financial sector; any delays in learning, refusal to learn, inadequacy in qualifications raised additional problems and even threats for the banking system; (c) the decision according to which the former state-owned mono-banks were tuned into commercial banks functioning in a market economy was among the solutions which caused great difficulties in creating the modern banking system and in some cases led to a large-scale fraud; (d) among the main reasons for greta difficulties and heavy financial losses was underestimation of the bank regulation institutions and procedures.