Corporate Insolvency Procedures and Bank Behavior: A Study of Selected Asian Economies

Qaizar Hussain and Clas Wihlborg

No 1999/135, IMF Working Papers from International Monetary Fund

Abstract: This paper explores insolvency and debt recovery procedures, and political, legal, and institutional factors influencing financial decisions of corporations and banks during pre-crisis years in six Asian economies. It also examines whether these factors may have contributed to the depth and duration of the 1997 crisis. There are two key findings: First, bank behavior and other institutional factors, and not the nature of stakeholder orientation, seem to explain variations in capital structures and the depth of recessions across economies. Second, aspects of insolvency procedures favoring rehabilitation of “financially distressed” firms seem to explain well the expected duration of the crisis.

Keywords: WP; short-term debt; corporate governance structure; debtor company; distressed firm; insolvency procedure; Insolvency procedures; Bankruptcy; Capital structure; Shareholder concentration; Firm performance; Asian crisis; economy characteristic; crisis economy; economy difference; recovery procedure; exchange rate; cross-economy relationship; rank correlations; legal system characteristic; debt recovery procedure; economy crisis; cost of capital; Corporate insolvency; Solvency; Stock markets; Nonperforming loans; Corruption; Global; bank behavior; aspects of Insolvency procedure; description of Insolvency procedure; Economic recession (search for similar items in EconPapers)
Pages: 46
Date: 1999-10-01
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Citations: View citations in EconPapers (15)

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