Market-Based Policy Instruments for Systemic Bank Restructuring

Tamim Bayoumi and Paul Masson

No 1998/113, IMF Working Papers from International Monetary Fund

Abstract: Since the early 1980s, well over 100 countries have experienced systemic bank insolvencies. An important innovation among the resulting policies for reestablishing bank soundness has been the reliance on market-based instruments and policies, in contrast to the largely non-market-oriented approach taken in the 1930s during the last big wave of banking crises. This paper surveys and assesses market-based policy instruments employed to overcome systemic bank problems. Considerations regarding the design and mix of instruments as well as cost-sharing arrangements are shown to be key aspects of effective bank restructuring. Selected country examples are used to illustrate best practices.

Keywords: WP; bank; loan; market; Credit-Anstalt; break; state bank; Financial Sector Policy; Banking Crisis; Restructuring; Central Banking; bank closure; loan workout; collector bank; bank asset quality; restructuring strategy; bank-client relation; Bank resolution; Loans; Commercial banks; Asset management companies (search for similar items in EconPapers)
Pages: 25
Date: 1998-08-01
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