Corporate Insolvency Procedures and Bank Behavior: A Study of Selected Asian Economies
IMF Working Papers, October 1, 1999
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- Corporate Insolvency Procedures and Bank Behavior: A Study of Selected Asian Economies
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Bibliographic details
- Authors: Qaizar Hussain, Clas Wihlborg
- Published: October 1, 1999
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451931310.001
Summary and Key Findings
- The paper explores insolvency and debt recovery procedures, and political, legal, and institutional factors influencing financial decisions of corporations and banks during pre-crisis years in six Asian economies, and examines whether these factors may have contributed to the depth and duration of the 1997 crisis.
- Two key findings:
- Bank behavior and other institutional factors, and not the nature of stakeholder orientation, seem to explain variations in capital structures and the depth of recessions across economies.
- Aspects of insolvency procedures favoring rehabilitation of “financially distressed” firms seem to explain well the expected duration of the crisis.
Scope, Data, and Approach
- Geographical scope: six Asian economies (specific economies not listed on the landing page).
- Temporal focus: pre-crisis years and the 1997 crisis period.
- Topics examined: insolvency procedures, debt recovery procedures, political/legal/institutional influences on corporate and bank financial decisions, contribution of these factors to crisis depth and duration.
Findings on Institutional and Legal Factors
- Institutional determinants (including bank behavior) are identified as key drivers of cross-economy differences in:
- Capital structures of corporations.
- Depth of economic recessions during the crisis.
- Legal features of insolvency regimes that emphasize rehabilitation of “financially distressed” firms are correlated with:
- The expected duration of the 1997 crisis.
Subjects and Keywords (as listed)
- Subjects: Banking; Corporate insolvency; Corruption; Crime; Economic growth; Economic recession; Financial crises; Financial institutions; Financial markets; Financial sector policy and analysis; Nonperforming loans; Solvency; Stock markets.
- Keywords: Asian crisis; aspects of Insolvency procedure; bank behavior; Bankruptcy; Capital structure; corporate governance structure; Corporate insolvency; Corruption; cost of capital; crisis economy; cross-economy relationship; debt recovery procedure; debtor company; description of Insolvency procedure; distressed firm; Economic recession; economy characteristic; economy crisis; economy difference; exchange rate; Firm performance; Global; insolvency procedure; Insolvency procedures; legal system characteristic; Nonperforming loans; rank correlations; recovery procedure; Shareholder concentration; short-term debt; Solvency; Stock markets; WP.
Content in this bundle
- Corporate Insolvency Procedures and Bank Behavior: A Study of Selected Asian Economies - WP/99/135