Bank restructuring in south-east Asia

Research output: Book/ReportReports

Abstract

Weaknesses in the financial systems of Thailand, Malaysia and Indonesia were exacerbated by very large devaluations in 1997 and early 1998. Policy responses have some similarities; all have set up agencies to manage bad assets and all have schemes to inject public money as capital into the banks. The differences between the responses reflect three main factors:
• the severity of the problems; Indonesia has had a much larger devaluation and more severe depression and consequently its banking system faces greater problems than does Malaysia or Thailand.
• political factors; Thailand and later Indonesia (like Korea) have had changes of leadership which facilitated policy changes and signed agreements with the IMF that have required some policy changes. In contrast Malaysia has maintained its, more market-sceptical, approach.
• the structure of the banking system;Thailand has been able to adopt more of a case-by-case approach to its treatment of banks while the much larger number of banks in Indonesia have forced them to adopt more general rules for restructuring.
This paper compares the main elements of the implementation of bank restructuring. It is not meant to be comprehensive. Moreover, these policies are being adapted over time as conditions change. It is of course too early to assess the efficacy of restructuring to date.
Original languageEnglish
Place of PublicationSwitzerland
PublisherBank for International Settlements
Number of pages25
ISBN (Print)9291316261
Publication statusPublished - 22 Sep 1999

Publication series

NameBIS Policy Papers
PublisherBank for International Settlements
No.6
ISSN (Print)1609-0381

Cite this