## Financial and Enterprise Restructuring in Emerging Market Economies

_IMF Working Papers, March 1, 1994_

## Source details

**Canonical URL:** [Financial and Enterprise Restructuring in Emerging Market Economies](https://www.imf.org/en/publications/wp/issues/2016/12/30/financial-and-enterprise-restructuring-in-emerging-market-economies-1842)

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## Bibliographic details
- Authors: Steven M. Fries, Timothy D. Lane
- Published: March 1, 1994
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451978858.001

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### Key findings
- 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.

### Policy recommendations and approaches
- 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:
  - Financing for enterprise sell-offs.
  - Financing for leasing arrangements.
- Combine enforcement of existing claims with proactive financing instruments to enable ownership change and operational restructuring of loss-making enterprises.

### Subjects and keywords emphasized
- 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

### Key publication facts and identifiers (as presented in source)
- 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

*Financial 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*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/financial-and-enterprise-restructuring-in-emerging-market-economies-1842_