Recapitalizing Banks with Public Funds

By Charles Enoch, Gillian Garcia and V. Sundararajan
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By Charles Enoch: International Monetary Fund
Gillian Garcia: International Monetary Fund
V. Sundararajan: International Monetary Fund

IMF Staff Papers, 2001, vol. 48, issue 1, 3

Abstract: Recapitalizing banks in a systemic crisis is a complex medium-term process that requires significant government intervention and careful management at both the strategic and individual bank levels. This paper examines the range of operational and strategic issues involved and the institutional arrangements needed to foster an effective banking system restructuring, as well as maximize the returns on government investment. Recapitalization approaches have varied in the different mixes of direct capital injections and asset purchases and rehabilitation that countries choose. The choice of an appropriate mix is critical to minimizing the expected present value of government outlays net of recoveries. Copyright 2001, International Monetary Fund

JEL-codes: G1 G21 G32 H81 O16 (search for similar items in EconPapers)
Date: 2001
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