The article analyses the structural changes of the financial intermediary system of
Eastern-Central European (ECE) countries, that joined the EU in 2004, namely the Czech
Republic, Hungary, Poland, Slovakia and Slovenia (ECE5) in the light of global and
European trends from 2004 to 2016. Its two main focuses are the characteristics of
the structural shifts and interconnectedness between banks and financial markets,
on the one hand, and the size and specificities of shadow banking systems, on the
other. Despite the limited catching up of the region the ECE5 countries has a much
less deep and more bank-based financial system than their European counterparts without
the emergence of significant market-based banking and shadow banking. However, while
in the developed countries the most important shadow banking institutions are the
non-money market mutual funds, in ECE5 countries other non-bank financial institutions
are those that potentially exposed to shadow banking risk.
