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In the wake of the crisis: dealing with distressed debt across the transition region

Author

Listed:
  • Ralph De Haas

    (European Bank of Reconstruction and Development)

  • Stephan Knobloch

    (European Bank of Reconstruction and Development)

Abstract

This paper reviews the origin and spread of the distressed debt problem in the transition region. We argue that while the crisis was triggered abroad, the current high level of distressed debt in various transition countries mainly reflects home-grown vulnerabilities. As in the West, the root causes of the debt problem were abundant and cheap funding and a gradual relaxation of banks’ lending standards – in particular an excessive reliance on rising real estate values.

Suggested Citation

  • Ralph De Haas & Stephan Knobloch, 2010. "In the wake of the crisis: dealing with distressed debt across the transition region," Working Papers 112, European Bank for Reconstruction and Development, Office of the Chief Economist.
    • Handle: RePEc:ebd:wpaper:112
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    More about this item

    Keywords

    distressed debt; insolvemcy; financial crisis;
    All these keywords.

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • K0 - Law and Economics - - General

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