Despite substantial economic convergence across Central and Eastern Europe over the past three decades, financial intermediation has remained persistently uneven, with Romania representing one of the most pronounced cases of this divergence. Existing research explains these differences primarily through banking-sector characteristics and other supply-side determinants. This paper argues that such explanations are incomplete because they overlook the conditions under which economies generate bankable demand.
Building on comparative evidence from the European Union, the Euro Area and the countries of Central and Eastern Europe, with Romania serving as the principal analytical case, the paper develops an integrated conceptual framework that explains how bankable demand emerges from the interaction between two complementary groups of determinants. The first comprises productive and economic factors, including productivity, capitalisation, financial performance and transparency. The second encompasses institutional, behavioural and socio-political factors, arguing that institutional trust, regulatory predictability and the influence of populist rhetoric shape incentives for formal economic participation and, ultimately, the formation of bankable demand. The analysis suggests that financial intermediation depends not only on banks' capacity to supply credit but also on an economy's capacity to generate firms and households that are both able and willing to participate in sustainable formal finance. Within this framework, populist rhetoric is interpreted not primarily as a political phenomenon, but as an institutional and behavioural mechanism capable of weakening trust, increasing regulatory uncertainty and reducing incentives for formalisation, thereby constraining the formation of bankable demand. By positioning bankable demand as the missing analytical link between economic convergence and financial deepening, the paper offers a complementary explanation for the persistence of shallow financial intermediation in transition economies and broadens the analytical perspective on financial development beyond conventional supply-side approaches.