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

In: Managing Currency Crises in Emerging Markets

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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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Suggested Citation

  • Stijn Claessens & Daniela Klingebiel & Luc Laeven, 2001. "Financial Restructuring in Banking and Corporate-Sector Crises What Policies to Pursue?," NBER Chapters, in: Managing Currency Crises in Emerging Markets, pages 147-185, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:14628
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    References listed on IDEAS

    as
    1. Honohan, Patrick & Klingebiel, Daniela, 2000. "Controlling the fiscal costs of banking crises," Policy Research Working Paper Series 2441, The World Bank.
    2. Claessens, Stijn & Djankov, Simeon & Xu, Lixin Colin, 2000. "Corporate Performance in the East Asian Financial Crisis," The World Bank Research Observer, World Bank, vol. 15(1), pages 23-46, February.
    3. Ofek, Eli, 1993. "Capital structure and firm response to poor performance: An empirical analysis," Journal of Financial Economics, Elsevier, vol. 34(1), pages 3-30, August.
    4. Mr. Mark R. Stone, 2000. "Large-Scale Post-Crisis Corporate Sector Restructuring," IMF Policy Discussion Papers 2000/007, International Monetary Fund.
    5. Mr. Timothy D. Lane & Mrs. Marianne Schulze-Gattas & Mr. Tsidi M Tsikata & Mr. Steven T Phillips & Mr. Atish R. Ghosh & Mr. A. J Hamann, 1999. "IMF-Supported Programs in Indonesia, Korea and Thailand," IMF Occasional Papers 1999/006, International Monetary Fund.
    6. Mr. Leslie E Teo & Mr. Charles Enoch & Mr. Carl-Johan Lindgren & Mr. Tomás J. T. Baliño & Ms. Anne Marie Gulde & Mr. Marc G Quintyn, 2000. "Financial Sector Crisis and Restructuring: Lessons from Asia: Lessons from Asia," IMF Occasional Papers 2000/003, International Monetary Fund.
    7. Mr. Mark R. Stone, 2000. "The Corporate Sector Dynamics of Systemic Financial Crises," IMF Working Papers 2000/114, International Monetary Fund.
    8. Dollar, David & Hallward-Driemeier, Mary, 2000. "Crisis, Adjustment, and Reform in Thailand's Industrial Firms," The World Bank Research Observer, World Bank, vol. 15(1), pages 1-22, February.
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    More about this item

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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