THE STOCK-EXCHANGE IN TRANSITION - THE WARSAW EXPERIENCE

The present paper turns its attention to the experience derived from the 30 months' existence of the Warsaw stock exchange, and shows that the capital market is still too restricted for the State to abandon interest in its development, and fall back on a laissez-faire attitude. The performance of the Warsaw stock exchange is analysed in relationship to its place in the new financial system and its contribution to financial stability, to the privatisation and restructuring of businesses. This analysis helps to identify the conditions which are required for a stock market to make a meaningful contribution to the economic transition. After consideration of various factors, it appears that the number of stocks quoted is a determining factor in the well-regulated development of the stock exchange. Consequently, if post-communist countries are seriously aiming at stability in their financial system, and expect the stock exchange to become an important component of the latter, the governments concerned will have to increase substantially the number of stocks on offer, even if this forces changes in estimates of the value of enterprises which are to be privatized.