Cost and Effectiveness of Banking Sector Restructuring in Transition Economies

October 1, 2001

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The paper analyses the cost and effectiveness of bank restructuring policies in 11 transition countries during 1991-98. It argues that country-specific banking sector features, the size of bad loans inherited from the centrally planned system, and weaknesses in the restructuring policies implemented were the main factors affecting the overall fiscal costs, with the latter two being more significant. The paper finds no significant relationship between the size of restructuring costs and overall improvement in banking sector performance for the sample countries as a whole.

Subject: Bank resolution, Banking, Commercial banks, Credit, Distressed assets, Financial crises, Financial institutions, Financial sector policy and analysis, Money, Nonperforming loans

Keywords: Baltics, bank, Bank resolution, bank restructuring, banking sector, banking sector condition, banking sector performance, banking sector problem, broad money, Central and Eastern Europe, Commercial banks, cost, Credit, Distressed assets, fiscal costs of banking crises, Nonperforming loans, private sector, restructuring cost, transition countries, WP

Pages:
38
Volume:
2001
DOI:
https://doi.org/10.5089/9781451857498.001
Issue:
157
Series:
Working Paper No. 2001/157
Stock No:
WPIEA1572001
ISBN:
9781451857498
ISSN:
1018-5941

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