Capital Markets in Southeast Europe

This book considers the theme of capital markets prowess and its link with surrounding economic dexterity. It presents the story on the back of dual intertwined cornerstone pillars: The initial agenda sets the global macroeconomic context and its interplay with financial markets and sub-segment capital markets. Then the book moves to the evolvement of the inherent capital markets, from nascence to present day, and through profiling of the current operating surroundings. The latter pillar performs empirical research built upon Eugene Fama’s weak form efficiency theorem with statistical testing results further framing the comprehensive findings on five selected southeast European developing capital markets. Jointly the two parts present the first such well-documented capital markets set up complemented by wide-ranging empirical findings of  inefficiency.

The book introduces at first the global perspective, in which the growing globalization in the past decades has led toimproved efficiencies, to faster innovation, and to greater systemic connectedness and meaningfully so by an increasing contribution from transitioning economies. Nevertheless, in higher systemic concentration there is an implied higher volatility risk and evidence has revealed dichotomous reaction through divergence in impact between the developed and the developing economies. The capital markets industry is at the forefront of financial innovation and many aspects in its function and power are a determining factor in wider socio-economic progress. The findings uncover details of market structure and role and with that this work creates significant new knowledge on the industry, and will be of particular interest to investors, taxpayers, academics, researchers, and policy makers of capital markets.

“The capital markets industry is at the forefront of financial innovation and it is a determining element in the wider socio-economic ongoings. The author effectively contrasts cross-industries associating theories with empirical statistical findings ascribing certainty to the capital markets structure and role inefficiencies while endorsing opportunities for improvements for the inclusive outlook. Through international perspective the writing demonstrates how the globalization trend, or its reversal, dichotomously impact productivity and growth and meaningfully so by an increasing contribution from developing economies.”

—Kudret Akgun, Chief Investment Officer and Global Head of Debt Capital Markets and Housing Finance at International Finance Corporation, Washington, D.C.

“The work by Ante Dodig is built upon juxtaposing complementary pillars. On one side the story reflects the development and profiling through the first three decades from nascence of capital markets in southeast Europe. On the other side the book provides extensive empirical evidence in statistical significance for capital markets inefficiency in its weak form. The narrative dispels frequent transitioning markets’ inconclusiveness and inconsistencies through constituting a factual analysis of capital market role and innovation in economic output. As the author recalls, it is the surrounding environment that shapes and determines operations as one result is not hereditary to another.”

—George M. Jabbour, Vice Dean for Executive Education, Program Director for Master of Science in Finance, and Professor of Finance, School of Business, The George Washington University, Washington, D.C.

“The role and structure of capital markets in south-eastern European countries is an important topic not often discussed due to the lack of historical data and the bank centricity of local financial markets. The topic is tackled head on by this book as the author successfully gives a comprehensive overview of the current state and of the historical development of capital markets in select SEE countries. Using rigorous scientific methods market efficiency is examined and results offer factual discernment into the state of the markets. The writing forms an interesting and formidable base for discussion on the capital markets part in capital allocation and furthering of economic growth. Having witnessed the development of said markets firsthand I find the historical overview detailed and compelling and the conclusions and recommendations offered by the author both prescient as well as insightful.”

—Andrija Hren, Chief Investment Officer, Erste Plavi Pension Fund Management Company, Zagreb

“As one of the small but strange breed of direct investors in this region over the past 16 years, I urge all practitioners to read this book. It tackles head on the key issues that have hindered inward investment and made those of us passionate about the region struggle so hard to convince investors to commit to the emerging growth story here. I encourage readers to focus on the conclusions, with especial attention on the author’s views on transparency, minority rights and on inter-regional integration which I feel has much merit. Finally, for those new to the region, the country-by-country analysis, from historical overview (so critical in understanding these markets) to contemporary setting and finally legal framework, is essential homework. Congratulations Ante, this is a fabulous piece of work.”

—Anthony Stalker, Partner, CEECAT Capital – a leading private equity and private credit investor focused on Emerging Europe

Ante Dodig is an Investment Officer at International Finance Corporation with over a decade of global experience in developing markets through leading groundbreaking institutional financial investing in emerging economies. He has a Master’s of Science in Finance and a PhD in Business Management while university teaching international courses on Investments, Investment Banking, and Capital Markets.