Bank Insolvency and Stabilization in Eastern Europe

January 1, 1992

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Bank Insolvency and Stabilization in Eastern Europe, (USA: International Monetary Fund, 1992) accessed September 19, 2024

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

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.

Subject: Bank credit, Bank solvency, Banking, Commercial banks, Consumption, Currencies, Financial institutions, Financial sector policy and analysis, Loans, Money, National accounts

Keywords: Bank contract, Bank portfolio, Bank solvency, Banking system, Capital stock, Cash flow, Commercial banks, Consumption, Consumption good, Currencies, Eastern Europe, Enterprise reform, Heterogenous firm, Index-linked liability, Loans, Market clearing price, Money supply, Nominal rate, Payment ability, Price level, Socialist economy, WP

Publication Details

Pages:

46
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1992/009
Stock No:

WPIEA0091992
ISBN:

9781451927146
ISSN:

1018-5941

Notes

Also published in Staff Papers, Vol. 39, No. 4, December 1992.

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