Bank Insolvency and Stabilization in Eastern Europe

International Monetary Fund

No 1992/009, IMF Working Papers from International Monetary Fund

Abstract: The profound structural reform underway in Eastern Europe has revealed the weakness of the banking sector there; macroeconomic stability and other reforms are thereby threatened. After an overview of recent developments in the banking sectors of these countries, a model is developed that clarifies the role of banking in an emerging market economy, and the danger that the disturbances inherent to it may be magnified and prolonged by a banking collapse. The implication is that priority must be given to mobilizing fiscal resources to cover the costs of restructuring the banking sector.

Keywords: WP; banking system; money supply; capital stock; market clearing price; socialist economy; price level; enterprise reform; index-linked liability; consumption good; cash flow; payment ability; nominal rate; heterogenous firm; bank contract; bank portfolio; Consumption; Commercial banks; Currencies; Loans; Bank solvency; Eastern Europe (search for similar items in EconPapers)
Pages: 46
Date: 1992-01-01
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Citations: View citations in EconPapers (10)

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