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Financial Restructuring in Banking and Corporate-Sector Crises

Financial Restructuring in Banking and Corporate-Sector Crises

What Policies to Pursue?

Chapter:
(p.147) 6 Financial Restructuring in Banking and Corporate-Sector Crises
Source:
Managing Currency Crises in Emerging Markets
Author(s):
Stijn Claessens, Daniela Klingebiel, Luc Laeven
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226155425.003.0008

This chapter reviews knowledge about the trade-offs involved in policies related to financial restructuring in banking and corporate sector crises. It examines a micro dataset for 700 companies in nine crisis countries to determine policies that are important in minimizing the cost of the crises. The analysis reveals that liquidity support early in the crisis and the use of a government-run asset management corporation can mitigate the severity of a financial crisis while government guarantees of the banking system's financial liabilities do not appear to be helpful.

Keywords:   financial restructuring, banking sector, corporate sector, liquidity support, asset management corporation, financial crisis, government guarantees

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