Interventions in Banks During Banking Crises: The Experience of Indonesia

Charles Enoch

No 2000/002, IMF Policy Discussion Papers from International Monetary Fund

Abstract: Interventions in banks are often an integral element of a government’s program for addressing a systemic banking crisis. Interventions may be warranted because the banks are deeply insolvent or riddled with fraud; they may be requiring substantial liquidity support. In some circumstances closures may be more effective than open bank resolution. There were four major sets of bank closures in Indonesia between November 1997 and March 1999. The initial closures were subject to criticism, but the more recent ones were viewed more positively. This paper looks at these experiences, and draws conclusions about closing banks in a systemic crisis.

Keywords: PDP; bank; government; bank closure; IBRA; state bank; Banks; banking crisis; Indonesia; BTO bank; bank takeover; banks understanding; taken-over bank; intervened bank; bank resolution package; bank restructuring program; government support; open bank resolution; bank resolution procedure; closed bank; Bank resolution; Commercial banks; Banking crises; Liquidity; Blanket guarantee; Central Asia; Asia and Pacific (search for similar items in EconPapers)
Pages: 31
Date: 2000-03-01
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