Financial Restructuring in Banking and Corporate Sector Crises: What Policies to Pursue?

38 Pages Posted: 21 Jul 2001 Last revised: 25 Sep 2001

See all articles by Stijn Claessens

Stijn Claessens

Bank for International Settlements (BIS)

Daniela Klingebiel

World Bank - Policy Unit

Luc Laeven

European Central Bank (ECB); Centre for Economic Policy Research (CEPR)

Date Written: July 2001

Abstract

We review the literature on resolving bank and corporate sector crises to identify government policies that affect the depth of a crisis and the ease and sustainability of recovery, and to analyze their fiscal cost. A consistent framework - including sufficient resources for loss-absorption and private agents facing the right framework of sticks and carrots - is the, although often missing key to successful bank and corporate restructuring. Sustainability of restructuring calls for deeper structural reforms, which often requires dealing with political economy factors up-front. Using data for 687 corporations from eight crisis countries, we find empirically that a package of specific resolution measures can help accelerate the recovery from a crisis. These policies, however, come with significant fiscal costs.

Suggested Citation

Claessens, Stijn and Klingebiel, Daniela and Laeven, Luc A., Financial Restructuring in Banking and Corporate Sector Crises: What Policies to Pursue? (July 2001). NBER Working Paper No. w8386, Available at SSRN: https://ssrn.com/abstract=277396

Stijn Claessens (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

Daniela Klingebiel

World Bank - Policy Unit ( email )

1818 H Street NW
Room MC 9-903
Washington, DC 20433
United States
202-473-7470 (Phone)
202-522-2031 (Fax)

Luc A. Laeven

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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