Bank-Led Restructuring in Poland: The Conciliation Process in Action

THE ECONOMICS OF TRANSITION, Fall 1996

Posted: 8 Jan 1997

Abstract

Poland's 1993 Enterprise and Bank Restructuring Program (EBRP) tried to force state-owned commercial banks to build institutional capacity and resolve their problem loans. The outcome of its innovative bank-led workout ("conciliation") process, documented in this study of 62 firms, is decidedly mixed. The EBRP forced banks to confront their problems, helped them build institutional capacity in their workout units, and furthered the difficult task of weeding out and closing clearly unviable firms. Yet it had limited power to promote needed restructuring or privatization in firms. The conciliation agreements were relatively unsophisticated and included few tangible requirements for operational or managerial change. The first two years of implementation saw a slowdown (over earlier years) in the rate of layoffs, a decline in average operating profitability, and very little real privatization. The main impact of conciliation appears to have been to reduce debt service and thereby give firms "breathing room."

JEL Classification: G21, G28, P21

Suggested Citation

Gray, Cheryl W. and Holle, Arnold, Bank-Led Restructuring in Poland: The Conciliation Process in Action. THE ECONOMICS OF TRANSITION, Fall 1996, Available at SSRN: https://ssrn.com/abstract=10270

Cheryl W. Gray (Contact Author)

World Bank ( email )

1818 H Street
Washington, DC 20433
United States
202-473-9188 (Phone)
202-522-1155 (Fax)

Arnold Holle

The Boston Consulting Group ( email )

J.F. Kennedylaan 100
3741 EH Baarn
Netherlands

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