Financial Sector Restructuring in Pakistan

In this paper an attempt has been made to review the financial restructuring process and its importance for economic growth and macroeconomic stability. The main focus is on the financial restructuring efforts undertaken by the government of Pakistan since 1990. We alsoanalyze the impacts of financial restructuring by using various financial indicators. The overallresults suggest that financial industry in Pakistan showing remarkable and unprecedented growth.Unlike 1990, the performance of financial sector is much better today. After the successfullycompletion of first generation of reforms, the introduction of second generation of reforms arerequired, which helps further strengthen the financial system and transform the benefits of the first generation of reforms to common man.

The use of asset management companies in the resolution of banking crises - cross-country experience

Asset management companies have been used to address the overhang of bad debt in the financial system. There are two main types of asset management company: those set up to expedite corporate restructuring and those established for rapid disposal of assets. A review of seven asset management companies reveals a mixed record. In two of three cases, asset management companies for corporate restructuring did not achieve their narrow goal of expediting bank or corporate restructuring, suggesting that they are not good vehicles for expediting corporate restructuring. Only a Swedish asset management company successfully managed its portfolio, acting sometimes as lead agent in restructuring - and helped by the fact that the assets acquired had mostly to do with real estate, not manufacturing, which is harder to restructure, and represented a small fraction of the banking system's assets, which made it easier for the company to remain independent of political pressures and to sell assets back to the private sector. Asset management companies used to dispose of assets, rapidly fared somewhat better. Two of four agencies (in Spain and the United States) achieved their objectives, suggesting that asset management companies can be used effectively for narrowly defined purposes of resolving insolvent and inviable financial institutions, and selling off their assets. Achieving these objectives required an easily liquefiable asset - real estate - mostly professional management, political independence, adequate bankruptcy, and foreclosure laws, appropriate funding, skilled resources, good information and management systems, and transparent operations and processes. The other two agencies (in Mexico and the Philippines) were doomed from the start, as governments transferred to them politically motivated loans or fraudulent assets, which were difficult for a government agency susceptible to political pressure and lacking independence to resolve or sell off.Banks&Banking Reform,International Terrorism&Counterterrorism,Financial Crisis Management&Restructuring,Payment Systems&Infrastructure,Municipal Financial Management,Financial Crisis Management&Restructuring,International Terrorism&Counterterrorism,Municipal Financial Management,Financial Intermediation,Banks&Banking Reform

Restructuring of insider-dominated firms

Using enterprise survey data for 1995-97, the author studies and compares how different modes of privatizing to insiders affect enterprise restructuring in two former Soviet republics, Georgia and Moldova. Restructuring in companies in which incumbent managers received significant ownership stakes for free was similar to that in companies that were still state-owned. By contrast, restructuring was faster in companies bought by their managers. The author interprets these results as suggesting that managers'incentives to restructure decrease when they regard their newly acquired ownership as a windfall gain.Microfinance,Small and Medium Size Enterprises,Banks&Banking Reform,Small Scale Enterprise,Financial Crisis Management&Restructuring,Private Participation in Infrastructure,Microfinance,Small Scale Enterprise,Financial Crisis Management&Restructuring,Banks&Banking Reform

Economic Performance in Post-Crisis Korea: A Critical Perspective on Neo-Liberal Restructuring

This paper evaluates the neoliberal economic restructuring process implemented in Korea following the 1997 Asian financial crisis. We first argue that the austerity macroeconomic policy of late 1997 and early 1998 was the main cause of the economic collapse in 1998, and that the decision of the IMF and President Kim Dae Jung to impose a radical neoliberal transformation of financial markets and large industrial firms in the depressed conditions of 1998, though defensible on political grounds, made the failure of these reforms virtually inevitable. A detailed analysis of the macro economy, labor markets, financial markets, and nonfinancial firms in Korea in the past three and one-half years shows that neoliberal restructuring has created a vicious cycle in which a perpetually weak financial sector fails to provide the capital needed for real sector growth, investment and financial robustness, while real sector financial fragility continuously weakens financial firms. Neoliberal policies may have pushed Korea onto a low-investment, low-growth, development path, one with rising insecurity and inequality. Meanwhile, the removal of virtually all restrictions on cross-border capital flows has led to a dramatic increase in the influence of foreign capital in Korea's economy. The paper concludes by arguing that Korea should reject radical neoliberal restructuring and instead adopt reforms designed to democratize and modernize its traditional state-guided growth model.Globalization; Korean crisis; neoliberalism; economic restructuring; Korean economic model

Bank insolvencies : cross-country experience

Few areas of the world have escaped significant losses from episodes of bank insolvency. Bank insolvency is more costly in the developing world, where losses represent a greater share of income. The authors present data on bank insolvency episodes since the late 1970s. This new database can be used in conjunction with readily available data. Information and insights are presented in seven tables on: a) major bank insolvencies episodes and systemic banking crises; b) main characteristics of banking crises; c) trade terms in crisis countries; d) trade concentration prior to crises; e) restructuring characteristics; f) financial analysis of crisis countries; and g) restructuring outcome in crisis countries. In a companion paper the authors discuss possible preventatives and the tradeoff between safety and soundness versus efficiency. Meanwhile, this initial database suggests further avenues for research. There is a dearth of widely available indicators on bank performance. More attention should be focused on developing indicators that might predict bank insolvency for individual banks and systems as a whole. The authors devise criteria for assessing how governments deal with insolvency and find that countries handle it well.Financial Crisis Management&Restructuring,Banks&Banking Reform,Payment Systems&Infrastructure,Financial Intermediation,Decentralization,Banks&Banking Reform,Financial Crisis Management&Restructuring,Financial Intermediation,Banking Law,Municipal Financial Management

Passion & Purpose: Raising the Fiscal Fitness Bar for Massachusetts Nonprofits

Presents data on and financial analyses of the state's nonprofit sector by organization type, budget, focus area, and location. Recommends better financial stewardship, restructuring, repositioning, and reinvestment to enhance nonprofits' sustainability

Restructuring in Ireland

Ireland’s economy is relatively small and trade-dependent and is considered one of the most globalised and open in the world. It suffered disproportionate damage following the 2008–9 global recession as a large construction and financial sector bust revealed widespread misallocation of resources – human and financial – in the preceding boom. Over 60% of construction sector employment has disappeared since 2008 and employment levels have shrunk by 15% overall. On the positive side, unemployment – while high at 14.6% – has been stable since late 2011 and the economy is experiencing output growth – unlike other Member States in financial assistance programmes of the EU, IMF and ECB Troika. Cost-competitiveness has improved since 2008 and Ireland continues to attract both high levels of foreign direct investment and foreign human capital. In 2012, 18% of the workforce was foreign-born and 44% of foreign-born workers were graduates. This restructuring information sheet draws on Eurofound data sources to describe recent developments in the Irish labour market. The European Restructuring Monitor (ERM) comprises a series of databases covering restructuring activity as well as related policy and legal instruments throughout Europe. Restructuring activity in 2012 tends to support the relatively positive prognosis for the Irish labour market; there were more announced job gains than losses in large-scale restructuring events. The European Jobs Monitor (EJM) uses EU Labour Force Survey (EU LFS) data to identify changing structural trends in employment by sector and occupation using various proxies of job quality. It highlights that the sharp losses in Irish employment experienced in the period 2008–10 were concentrated in the middle of the wage distribution

The incentive-compatible design of deposit insurance and bank failure resolution : concepts and country studies

Deposit insurance schemes and bank failure resolution systems are asked to fulfill conflicting public policy objectives: on the one hand, they are supposed to protect small depositors and prevent contagion risks from bank runs; on the other hand, they are supposed to minimize aggressive risk taking by banks. Beck discusses the incentive-compatible design and interaction of both components of the financial safety net and describes and compares three countries with different safety net arrangements-Brazil, Germany, and Russia.Banks&Banking Reform,Insurance&Risk Mitigation,Financial Intermediation,Financial Crisis Management&Restructuring,Payment Systems&Infrastructure,Financial Intermediation,Financial Crisis Management&Restructuring,Insurance&Risk Mitigation,Insurance Law,Banks&Banking Reform

Decentralized credtor-led corporate restructuring - cross-country experience

Countries that have experienced banking crises have adopted oneof two distinct approaches toward the resolution of non-performing assets-a centralized or a decentralized solution. A centralized approach entails setting up a government agency-an asset management company-with the full responsibility for acquiring, restructuring, and selling of the assets. A decentralized approach relies on banks and other creditors to manage and resolve non-performing assets. The authors study banking crises where governments adopted a decentralized, creditor-led workout strategy following systemic crises. They use a case study approach and analyze seven banking crises in which governments mainly relied on banks to resolve non-performing assets. The study suggests that out of the seven cases, only Chile, Norway, and Poland successfully restructured their corporate sectors with companies attaining viable financial structures. The analysis underscores that as in the case of a centralized strategy the prerequisites for a successful decentralized restructuring strategy are manifold. The successful countries significantly improved the banking system's capital position, enabling banks to write down loan losses; banks as well as corporations had adequate incentives to engage in corporate restructuring; and ownership links between banks and corporations were limited or severed during crises.Financial Intermediation,Financial Crisis Management&Restructuring,Payment Systems&Infrastructure,Banks&Banking Reform,International Terrorism&Counterterrorism,Banks&Banking Reform,Financial Crisis Management&Restructuring,Financial Intermediation,International Terrorism&Counterterrorism,Banking Law

Distributional effects of crises : the role of financial transfers

Financial crises affect income distribution by way of different channels. The authors argue that financial transfers are an important channel which has been overlooked by the literature. They study the role of financial transfers by analyzing some of the most severe Latin American crises during the past decades (Chile 1981-83, Mexico 1994-95, Ecuador 1998-2000, Argentina 2001-02, and Uruguay 2002). First, the authors investigate transfers to the financial sector-those from nonparticipants to participants of the financial sector. Second, they explore who receives these financial transfers by identifying the winners and losers within the financial sector. Their analysis suggests that financial transfers during crises are large and expected to increase income inequality.Financial Intermediation,Banks&Banking Reform,Economic Theory&Research,Payment Systems&Infrastructure,Financial Crisis Management&Restructuring,Banks&Banking Reform,Financial Crisis Management&Restructuring,Financial Intermediation,Financial Economics,Economic Theory&Research