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This paper is a part of a project (and forthcoming IMF book) on Systemic Bank Restructuring and Macroeconomic Policy, supervised by William E. Alexander, Jeff Davis, Liam Ebrill, and Carl Lindgren. We thank all those involved, especially William E. Alexander for valuable input and suggestions and Kiran Sastry for able research assistance.
Data availability problems made it difficult to include any bank restructuring efforts that took place before the 1980s.
The countries that embarked upon bank restructuring operations during or after 1994 were separately classified as “recent.”
Thus, if all 12 indicators showed improvements, a country would receive a maximum score of 12. A maximum score would indicate that the banking sector had fully recovered from the aftermath of the banking system problems. Clearly, other weighting schemes are possible; however, further judgement would be required to assign weights to different performance indicators. For simplicity, equal weighting was used.
There are, course, always exceptions. One is Spain, which made extensive use of long- and short-term central bank financial support. However, it did so in close cooperation with the government and the lead restructuring agency (the deposit insurance agency) and placed considerable emphasis on the incentive compatible design of support. Moreover, the banking community carried part of the financial burden.
No attempt was made to systematically identify the role of other factors such as adjustment programs taking place or initiated during the bank restructuring process.
It was not possible to identify bank assistance outlays in budget balances in the survey.