{
  "title": "Financial and Enterprise Restructuring in Emerging Market Economies",
  "publication": "IMF Working Papers, March 1, 1994",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/financial-and-enterprise-restructuring-in-emerging-market-economies-1842",
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  "summary": "This paper examines alternative approaches to building sound financial structures in emerging market economies. The foremost task is to resolve the bad loan problem and to recapitalize insolvent state banks.",
  "sections": [
    {
      "heading": "Key findings",
      "content": "- The foremost task in building sound financial structures in emerging market economies is to resolve the bad loan problem and to recapitalize insolvent state banks.\n- Restoring an incentive for banks to price accurately the risks of new lending would be an important first step in strengthening financial control.\n- Addressing bad loans and bank recapitalization alone is not sufficient; the remainder of the task is to provide financing that facilitates the economic restructuring of SOEs.\n- A comprehensive strategy may involve combining discipline derived from enforcing existing loans to SOEs with adequate funding for new forms of ownership.\n- Financing needs identified include support for enterprise sell-offs and leasing as mechanisms to restructure enterprises and transfer ownership or operational control."
    },
    {
      "heading": "Policy recommendations and approaches",
      "content": "- Resolve nonperforming loans and recapitalize insolvent state banks to restore correct risk pricing in lending.\n- Enforce existing loans to SOEs to derive discipline and signal consequences for nonpayment or poor performance.\n- Provide adequate funding mechanisms tailored to enterprise restructuring, including:\n  - Financing for enterprise sell-offs.\n  - Financing for leasing arrangements.\n- Combine enforcement of existing claims with proactive financing instruments to enable ownership change and operational restructuring of loss-making enterprises."
    },
    {
      "heading": "Subjects and keywords emphasized",
      "content": "- Bank credit; Banking; Distressed assets; Emerging and frontier financial markets; Financial institutions; Financial markets; Financial sector policy and analysis; Financial statements; Loans; Moral hazard; Public financial management (PFM)\n- Central and Eastern Europe; Distressed assets; emerging market economy; enterprise asset; enterprise operation; enterprise restructuring; enterprise sector; enterprise sell-off; Financial statements; Loans; loss-making enterprise; Moral hazard; owner-managed firm; WP"
    },
    {
      "heading": "Key publication facts and identifiers (as presented in source)",
      "content": "- BySteven M. Fries, Timothy D. Lane\n- March 1, 1994\n- Pages: 28\n- Volume: 1994\n- Issue: 034\n- Series: Working Paper No. 1994/034\n- DOI: https://doi.org/10.5089/9781451978858.001\n- Stock No: WPIEA0341994\n- ISBN: 9781451978858\n- ISSN: 1018-5941\n\nFinancial and Enterprise Restructuring in Emerging Market Economies — BySteven M. Fries, Timothy D. Lane; March 1, 1994; Working Paper No. 1994/034; DOI: https://doi.org/10.5089/9781451978858.001\n\n---\n\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/financial-and-enterprise-restructuring-in-emerging-market-economies-1842"
    }
  ],
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    "Authors: Steven M. Fries, Timothy D. Lane",
    "Published: March 1, 1994",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451978858.001",
    "The foremost task in building sound financial structures in emerging market economies is to resolve the bad loan problem and to recapitalize insolvent state banks.",
    "Restoring an incentive for banks to price accurately the risks of new lending would be an important first step in strengthening financial control.",
    "Addressing bad loans and bank recapitalization alone is not sufficient; the remainder of the task is to provide financing that facilitates the economic restructuring of SOEs.",
    "A comprehensive strategy may involve combining discipline derived from enforcing existing loans to SOEs with adequate funding for new forms of ownership.",
    "Financing needs identified include support for enterprise sell-offs and leasing as mechanisms to restructure enterprises and transfer ownership or operational control.",
    "Resolve nonperforming loans and recapitalize insolvent state banks to restore correct risk pricing in lending.",
    "Enforce existing loans to SOEs to derive discipline and signal consequences for nonpayment or poor performance.",
    "Provide adequate funding mechanisms tailored to enterprise restructuring, including:",
    "Combine enforcement of existing claims with proactive financing instruments to enable ownership change and operational restructuring of loss-making enterprises.",
    "Bank credit; Banking; Distressed assets; Emerging and frontier financial markets; Financial institutions; Financial markets; Financial sector policy and analysis; Financial statements; Loans; Moral hazard; Public financial management (PFM)",
    "Central and Eastern Europe; Distressed assets; emerging market economy; enterprise asset; enterprise operation; enterprise restructuring; enterprise sector; enterprise sell-off; Financial statements; Loans; loss-making enterprise; Moral hazard; owner-managed firm; WP",
    "BySteven M. Fries, Timothy D. Lane",
    "March 1, 1994",
    "Pages: 28",
    "Volume: 1994",
    "Issue: 034",
    "Series: Working Paper No. 1994/034",
    "DOI: https://doi.org/10.5089/9781451978858.001",
    "Stock No: WPIEA0341994",
    "ISBN: 9781451978858",
    "ISSN: 1018-5941"
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