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

Author/Editor:

Qaizar Hussain ; Clas Wihlborg

Publication Date:

October 1, 1999

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 1999/135

Subject:

Banking Corporate insolvency Corruption Crime Economic growth Economic recession Financial crises Financial institutions Financial markets Financial sector policy and analysis Nonperforming loans Solvency Stock markets

English

Publication Date:

October 1, 1999

ISBN/ISSN:

9781451931310/1018-5941

Stock No:

WPIEA1351999

Pages:

46

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