IV Performance of the Banking Sector
Author:
Mr. Guillermo Calvo https://isni.org/isni/0000000404811396 International Monetary Fund

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,
Mr. Eduardo Borensztein
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Mr. Paul R Masson
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Mr. Manmohan S. Kumar
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Abstract

One of the key problems facing the newly constituted commercial banks is the poor quality of loan portfolios. This section discusses the problem and suggests several approaches for dealing with it. However, even if the problem of the loan portfolios could be resolved quickly, the banking sector would still not be efficient, and the portfolio problem would recur unless the enterprise sector is also restructured. This section also highlights the lack of competition in the banking sector, notes its implication for banks’ efficiency and the cost of capital, and outlines steps to encourage it.

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