Decentralized Creditor-Led Corporate Restructuring Cross-Country Experience
- Topics:
- Corporate Restructuring
- Tags:
- Asset,
- Asset Management,
- Bank,
- Banking,
- Banking Crise,
- Business Operations,
- Financial Services,
- Operational Planning
- Source:
- World Bank Group
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Overview: Countries that have experienced banking crises have adopted one of two distinct approaches toward the resolution of non-performing assets—a centralized or a decentralized solution. The former entails setting up a government agency, with the full responsibility for acquiring, restructuring, and selling of the assets while the latter relies on banks and other creditors to manage and resolve non-performing assets. In this article, one study banking crises where governments adopted a decentralized creditor led workout strategy following systemic crises. It uses a case study approach and analyzes seven banking crises in which governments mainly relied on banks to resolve non-performing assets. As a result, successful countries significantly improved the banking system’s capital position enabling banks to write down loan losses; banks as well as corporations had adequate incentives to engage in corporate restructuring; and ownership links between banks and corporations were limited or severed during crises.
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Format: PDF | Size: 183KB | Date: Oct 2002 | Pages: 54
