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Financial Restructuring in Banking and Corporate Sector Crises: What Policies to Pursue?

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  • Stijn Claessens
  • Daniela Klingebiel
  • Luc Laeven

Abstract

We review the literature on resolving bank and corporate sector crises to identify government policies that affect the depth of a crisis and the ease and sustainability of recovery, and to analyze their fiscal cost. A consistent framework - including sufficient resources for loss-absorption and private agents facing the right framework of sticks and carrots - is the, although often missing key to successful bank and corporate restructuring. Sustainability of restructuring calls for deeper structural reforms, which often requires dealing with political economy factors up-front. Using data for 687 corporations from eight crisis countries, we find empirically that a package of specific resolution measures can help accelerate the recovery from a crisis. These policies, however, come with significant fiscal costs.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8386.

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Date of creation: Jul 2001
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Handle: RePEc:nbr:nberwo:8386

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  1. Honohan, Patrick & Klingebiel, Daniela, 2000. "Controlling the fiscal costs of banking crises," Policy Research Working Paper Series 2441, The World Bank.
  2. Mark R. Stone, 2000. "Large-Scale Post-Crisis Corporate Sector Restructuring," IMF Policy Discussion Papers 00/7, International Monetary Fund.
  3. Michael Bordo & Barry Eichengreen & Daniela Klingebiel & Maria Soledad Martinez-Peria, 2001. "Is the crisis problem growing more severe?," Economic Policy, CEPR;CES;MSH, CEPR;CES;MSH, vol. 16(32), pages 51-82, 04.
  4. Leslie Teo & Charles Enoch & Carl-Johan Lindgren & Tomás J. T. Baliño & Anne Marie Gulde & Marc Quintyn, 2000. "Financial Sector Crisis and Restructuring," IMF Occasional Papers 188, International Monetary Fund.
  5. Claessens, Stijn & Djankov, Simeon & Xu, Lixin Colin, 2000. "Corporate Performance in the East Asian Financial Crisis," World Bank Research Observer, World Bank Group, World Bank Group, vol. 15(1), pages 23-46, February.
  6. Patrick Honohan & Daniela Klingebiel, 2000. "Controlling fiscal costs of banking crises," Proceedings, Federal Reserve Bank of Chicago 682, Federal Reserve Bank of Chicago.
  7. Ofek, Eli, 1993. "Capital structure and firm response to poor performance: An empirical analysis," Journal of Financial Economics, Elsevier, Elsevier, vol. 34(1), pages 3-30, August.
  8. Dollar, David & Hallward-Driemeier, Mary, 2000. "Crisis, Adjustment, and Reform in Thailand's Industrial Firms," World Bank Research Observer, World Bank Group, World Bank Group, vol. 15(1), pages 1-22, February.
  9. Mark R. Stone, 2000. "The Corporate Sector Dynamics of Systemic Financial Crises," IMF Working Papers 00/114, International Monetary Fund.
  10. Timothy D. Lane & Marianne Schulze-Gattas & T. M. Tsikata & Steven Phillips & Atish R. Ghosh & A. Javier Hamann, 1999. "IMF-Supported Programs in Indonesia, Korea and Thailand," IMF Occasional Papers 178, International Monetary Fund.
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Citations

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Cited by:
  1. Okabe, Yasunobu, 2013. "Financial Restructuring after the 1997 Crisis and Impact of the Lehman Shock: Path Dependence of Financial Systems in Korea and Thailand," Working Papers, JICA Research Institute 51, JICA Research Institute.
  2. Carlos Esteban Posada & Jorge Andrés Tamayo C., 2009. "La crisis reciente de Estados Unidos (2007-2008): redescubriendo la importancia del mercado de "fondos prestables"," BORRADORES DE ECONOMIA 005388, BANCO DE LA REPÚBLICA.
  3. Thomas Meyer, 2002. "The Eastward Enlargement of the Eurozone: The Shaping of Capital Markets," Eastward Enlargement of the Euro-zone Working Papers, Free University Berlin, Jean Monnet Centre of Excellence wp05, Free University Berlin, Jean Monnet Centre of Excellence, revised 01 Aug 2002.
  4. Claessens,Constantijn A. & Klingebiel, Daniela & Laeven, Luc, 2004. "Resolving systemic financial crisis : policies and institutions," Policy Research Working Paper Series 3377, The World Bank.
  5. Laeven, Luc & Klingebiel, Daniela & Kroszner, Randy, 2002. "Financial crises, financial dependence, and industry growth," Policy Research Working Paper Series 2855, The World Bank.
  6. Shimizu, Katsutoshi, 2006. "How can we effectively resolve the financial crisis: Empirical evidence on the bank rehabilitation plan of the Japanese government," Pacific-Basin Finance Journal, Elsevier, Elsevier, vol. 14(2), pages 119-134, April.
  7. Beck, Thorsten & Laeven, Luc, 2006. "Resolution of failed banks by deposit insurers : cross-country evidence," Policy Research Working Paper Series 3920, The World Bank.
  8. Timothy Chue & David Cook, 2004. "Sudden Stops and Liability Dollarization: Evidence from East Asian Financial Intermediaries," Econometric Society 2004 Far Eastern Meetings, Econometric Society 646, Econometric Society.
  9. Klingebiel, Daniela & Kroszner, Randall S & Laeven, Luc, 2006. "Banking Crises, Financial Dependence and Growth," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5623, C.E.P.R. Discussion Papers.
  10. Bolzico, Javier & Mascaro, Yira & Granata, Paola, 2007. "Practical guidelines for effective bank resolution," Policy Research Working Paper Series 4389, The World Bank.
  11. Vodová, Pavla, 2004. "Early warning signals and their role in preventing banking crises. The Czech Republic case," MPRA Paper 11902, University Library of Munich, Germany.
  12. Manuela Goretti & Marcos Souto, 2013. "Macro-Financial Implications of Corporate (De)Leveraging in the Euro Area Periphery," IMF Working Papers 13/154, International Monetary Fund.
  13. Una Okonkwo Osili & Anna Paulson, 2009. "Bank Crises and Investor Confidence," Working Papers 09-02, Center for Economic Studies, U.S. Census Bureau.
  14. Brown, Martin & Lane, Philip R., 2011. "Debt overhang in emerging Europe ?," Policy Research Working Paper Series 5784, The World Bank.
  15. Fabian Valencia & Luc Laeven, 2008. "Systemic Banking Crises," IMF Working Papers 08/224, International Monetary Fund.
  16. Jože P. Damijan, 2014. "Corporate financial soundness and its impact on firm performance: Implications for corporate debt restructuring in Slovenia," Working Papers, European Bank for Reconstruction and Development, Office of the Chief Economist 168, European Bank for Reconstruction and Development, Office of the Chief Economist.
  17. Thorvardur Tjörvi Ólafsson & Karen Á. Vignisdóttir, 2012. "Households’ position in the financial crisis in Iceland. Analysis based on a nationwide household-level database," Economics, Department of Economics, Central bank of Iceland wp59, Department of Economics, Central bank of Iceland.

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