The early-1990s mark the beginning of considerable reforms of the financial systems in the former Czechoslovakia (split into the Czech Republic and the Slovak Republic since 1993), in Hungary and in Poland on their way from centrally planned to market economies. In the meantime, these so-called Visegrad countries have been increasingly integrated into the international financial markets. Striking indicators are currency convertibility, liberalized capital movements, and the shift from fixed to flexible exchange rate regimes. A major task of the post-socialist countries was the design of a viable banking system and the introduction of monetary policy strategies allowing monetary impulses to be channelled effectively through the permanently changing financial and real sectors. The present book concentrates on the transformation of the Visegrad countries` banking sectors and on their monetary policy actions during difficult stages of economic transition. Special focus is on whether (restrictive) monetary impulses have been mainly transmitted via the bank loan volume or via relative prices. This question, which is still discussed for established market economies being economically stable in comparison with post-socialist countries, is analysed theoretically and empirically. The finding is that the bank loan volume has not been as important as monetary transmission variable as one would expect against the background of lacking alternative financial sources in the Visegrad countries. Restrictive monetary policy actions were rather counteracted because a continuously growing bank deposit volume filled the gap of bank reserves. Consequently, there remain concerns about cautious bank lending in the Visegrad countries. An effective banking supervision framework would be necessary. This study was written during Kirsten Heppke`s stay at the Institute of Economic Theory of the University of the Federal Armed Forces Hamburg. It is part of the Hamburg Institute of International Economics research programme "International Financial Markets". At the same time, the author was a fellow at the "Europa Kolleg", a graduate college in Hamburg, and a scholar of the Friedrich-Naumann Foundation providing her with financial support out of funds of the Bundesministerium fur Bildung und Forschung. This study was submitted to the University of the Federal Armed Forces in May 2000 and accepted as Ph.D. dissertation. At present, Kirsten Heppke works at the department of economics in the Hannover branch of the Deutsche Bundesbank. Prof. Dr. Franco E. Reither