Transforming Bad Banks into Good Banks: Lessons from the Chilean Financial Crisis
This paper provides a narrative account of the 1980s Chilean banking crisis. The Chilean crisis saw the nationalization of the two largest financial conglomerates and resulted in more than half of the financial system’s assets and liabilities falling under direct control of the government. The paper provides details of the bank rescue measures as well as the resolution of the banks' nonperforming debt problem. By providing a detailed chronology of the financial crisis, the paper highlights the evolutionary process that characterized the interventions taken by the Chilean authorities to restore the financial system to solvency. Despite the pessimism that accompanied the early stages of the banking crisis, the fifteen-year process of intervention, restructuring, and recapitalization left the financial system well-positioned to finance Chile’s economic growth, which averaged six percent per year (in real terms) for the 20 years following 1985.
|Date of creation:||Apr 2009|
|Date of revision:|
|Contact details of provider:|| Postal: Box 353330, Seattle, WA 98193-3330|
Web page: http://www.econ.washington.edu/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:udb:wpaper:uwec-2009-10. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael Goldblatt)
If references are entirely missing, you can add them using this form.