Systemic Financial Crises: Containment and Resolution

by Edited by Patrick Honohan , Luc Laeven

• ISBN13: 9780521851855
• ISBN10: 0521851858
• Format: Hardcover
• Copyright: 2005-09-26
• Publisher: Cambridge University Press

Summary

Faced with a systemic financial sector crisis, policymakers need to make difficult choices under pressure. Based on the experience of many countries in recent years, few have been able to achieve a speedy, lasting and low-cost resolution. This volume considers the strengths and weaknesses of the various policy options, covering both microeconomic (including recapitalization of banks, bank closures, subsidies for distressed borrowers, capital adequacy rules and corporate governance and bankruptcy law requirements) and macroeconomic (including monetary and fiscal policy) dimensions. The contributors explore the important but little understood trade-offs that are involved, such as between policies which take effect quickly, those which minimize long-term fiscal and economic costs, and those which create favorable incentives for future stability. Successfully implementing crisis management and crisis resolution policy required attention to detail and a good flow of information.

Table of Contents

Contributors	vii
Foreword	ix
Gerard Caprio
Acknowledgments	xi
PART ONE. INTRODUCTION
1 Introduction and Overview	3	(22)
Patrick Honohan and Luc Laeven
PART TWO. CONTAINMENT AND RESOLUTION
2 Financial Crisis Policies and Resolution Mechanisms: A Taxonomy from Cross-Country Experience	25	(51)
Charles W. Calomiris, Daniela Klingebiel, and Luc Laeven
3 Pitfalls in Managing Closures of Financial Institutions	76	(33)
Carl-Johan Lindgren
4 Fiscal, Monetary, and Incentive Implications of Bank Recapitalization	109	(28)
Patrick Honohan
PART THREE. MODELS AND ECONOMETRIC EVIDENCE
5 Policies for Banking Crises: A Theoretical Framework	137	(32)
Rafael Repullo
6 Crisis Resolution, Policies, and Institutions: Empirical Evidence	169	(28)
Stijn Claessens, Daniela Klingebiel, and Luc Laeven
PART FOUR. STRUCTURAL REFORMS
7 Financial Crises and the Presence of Foreign Banks	197	(35)
Adrian Tschoegl
8 Maximizing the Value of Distressed Assets: Bankruptcy Law and the Efficient Reorganization of Firms	232	(44)
David Smith and Per Strömberg
9 Crisis Resolution and Credit Allocation: The Case of Japan	276	(31)
Joe Peek and Eric Rosengren
Appendix: Banking Crisis Database	307	(34)
References	341	(20)
Index	361