ABSTRACT
This chapter looks at the first building block of the model for the Polish economy, which is the main objective of the book. We begin by considering the portfolio behaviour of the commercial banks. In particular, we are concerned with analyzing the main changes that have taken place in the composition of the portfolio and the main factors which may have accounted for the observed changes. For this purpose we proceed by describing the main changes in the composition of their portfolios and then look at the behaviour of the various rates of return. This is followed by a simple Tobin-like model which tries to capture some of the special features of the Polish commercial banking sector. The model is then estimated and its tracking power examined. The final section reports some illustrative policy simulations.
