allocation of credit, in Hungary it seems to have originated in the withdrawal of credit facilities by the banks and a concomitant large expansion of "aistress" trade credit.

The queuing problem raises some interesting questions about the financial state of industrial and commercial companies. It appears to refer to the accumulation of payment orders that are issued by companies in favor of their suppliers but cannot be paid because of insufficient bank balances by such companies. The qui .dng phenomenon arises because banks delay execution of payment orders until their customers receive good funds from other firms.

However, data on the volume of payments subject to the queuing problem do not necessarily indicate the size of unpaid inter-enterprise credits. In the first place, companies that are near the point of failure may stop issuing payment orders so that a substantial part of uncollected trade credit will not be included in the data on queuing. Second, queuing may affect enterprises that face shortterm liquidity problems but may otherwise be solvent and even have good prospects. The growing volume of queuing provides an indication of worsening liquidity problems but says little about the solvency of the enterprise sector. For the latter, detailed studies on the prospects of individual companies and whole industrial sectors would be necessary.

# Liabilities

NBH data on deposits from the enterprise sector and on NBH refinancings also suggest an increase in bank competition and market-orientation. Four main trends are highlighted. First, a significant decline of bank reliance on NBH refinancing. Second, a rapid increase in the market share of small and medium size banks. Third, an increase in the borrow-back ratio from the enterprise sector, i.e. deposits taken from enterprises as a ratio of the credits extended to them. And, fourth, a segmentation of the market between ordinary banking services, such as checking accounts, and services related to trade finance. The former seems to be dominated by the large banks, whereas the new small and medium-size banks, especially the joint venture banks, appear to have a competitive edge in the latter.

Reliance on NBH refinancing declined for the whole banking sector. After a substantial fall in 1988, the use of refinancing facilities grew more or less in line with total credits. In relation to credits extended to the enterprise sectcr, refinancing declined from 70% in 1987 to 59% in 1990 (Figure 3). This was caused by the fall in the reliance on refinancing by the large banks from 71% to 62% of their credits. In contrast, the small and medium-size banks steadily increased their NBH refinancing from 7% to 31% of their credits. Nevertheless, this remains only half of the corresponding ratio for the large banks.

A big part of the use of refinancing facilities by smaller banks is probably accounted for by the commercial banks that came from the ranks of SFIs. For the savings banks, the refinancing ratio was both high and quite volatile from year to year. Most likely, this was due to the use of refinancing facilities by the NSB for its loans to the nonbusiness sector.

The recourse to central bank refinancing also clearly declined relative to enterprise deposits and total assets. This reflected strong growth in the mobilization of business deposits (69% growth between 1987 and 1990). The small and medium size banks were particularly active, accounting for _35%_ of the increase in deposits. As a result, their share trebled from 6% to 18%. In contrast, the share of the four large banks fell from 84% to 67%, although they still accounted for 42% of the 8