Managing The Real And Fiscal Effects Of Banking Crises (world Bank Discussion Papers)

"This volume presents two recent analyses, prompted by the recent East Asian crisis, of government responses to financial crises. It evaluates the tradeoffs involved in public policies for systemic financial and corporate sector restructuring. This book also draws on cross-country evidence to help determine whether specific crisis containment and resolution policies effect the fiscal costs of resolving a crisis. A comprehensive database, of 113 systemic banking crises that have occurred in 93 countries since the 1970s, is included. Also incorporated in this database is information on 50 borderline nonsystemic banking crises in 44 countries during that same period of time."

the Study Provides Two Recent Analyses, Spurred By The Recent East Asian Crisis, Of Government Responses To Financial Distress, And, Also Presents A Comprehensive Database On Systemic, And Borderline Banking Crises. In The First Chapter, The Authors Review The Tradeoffs Involved In Public Policies For Systemic, Financial, And Corporate Sector Restructuring. They Find That Consistent Policies Are Crucial For Success, Though Such Consistency Is Often Missing. This Consistency Covers Many Dimensions, And Entails Among Other Things, Ensuring That There Are Sufficient Resources For Absorbing Losses, And, That Private Agents Face Appropriate Incentives For Restructuring. The Authors Also Find That Sustainable Restructuring, Requires Deep Structural Reforms, Facing Upfront, Political Economy Factors. In The Second Chapter, The Authors Use Cross-country Evidence To Determine Whether Specific Crisis Containment, And Resolution Policies, Systematically Influence The Fiscal Costs Of Resolving A Crisis. They Find That Accommodating Policies - Such As Blanket Deposit Guarantees, Debtor Bailouts, And Regulatory Forbearance, Etc. - Significantly Increase Fiscal Costs. The Third Chapter, Is A Comprehensive Database On Systemic Banking Crises That Have Occurred Since The Late 1970s. The Database Also Includes Information On Borderline (non-systemic) Banking Crises During The Same Period.