Resource information
Resolving systemic banking and corporate
distress is not easy. The large scale of the East Asian
financial crisis has made the task even more daunting in
Indonesia, the Republic of Korea, Malaysia, and Thailand.
Two years into the process, bank and corporate restructuring
is still a work in progress. Governments should act to
accelerate it. Besides adopting common policy prescriptions
- improving financial regulation, corporate governance, and
bankruptcy procedures and shoring up banks' capital
positions - governments could take three additional steps:
Set up competitive, privately managed specialized funds, to
hold nonperforming loans and depoliticize restructuring.
Allow auctions as an alternative to negotiations, to speed
debt restructuring. And allow employee ownership
participation schemes, to reduce workers' resistance to
changes in ownership.
