The subject matter of this final thesis explains the process of privatization and how it flowed in Croatia. Privatization is a process by which state-owned enterprises have been sold transformed to private-owned enterprises. The transitional economy ecompasses the transition countries of Eastern Europe and the former Soviet Union after the collapse of socialism and the introduction of capitalism. Croatia's transition from socialism into a market economy began in the circumstances more difficult than many other transition countries. War has left profound consequences on the entire economy. Privatization in Croatia took place in four phases. The first from year 1991. to 1994. started the key problem of banking and economy relations. The second phase from 1994. to 1998. has enabled and slowed down the recovery of the economy. The third phase from 1998. to 2000. was marked by the establishment of Privatization Investment Funds and bank privatization. In the fourth phase on year 2000. bankruptcies with the tendency to sell remaning portfolios and potential revision of conversion and privatization prevailed.