- Leslie Teo, Charles Enoch, Carl-Johan Lindgren, Tomás Baliño, Anne Gulde, and Marc Quintyn
- Published Date:
- January 2000
© 1999 International Monetary Fund
Production: IMF Graphics Section
Typesetting: Joseph Ashok Kumar
Figures: In-Ok Yoon
Library of Congress Cataloging-in-Publication Data
Financial sector crisis and restructuring : lessons from Asia / Carl-Johan Lindgren… [et al.].
p. cm. — (Occasional paper: 188)
Includes bibliographical references.
1. Finance—Asia—Case studies. 2. Financial crises—Asia—Case studies. I. Lindgren, Carl-Johan II. Occasional paper (International Monetary Fund); 188.
HC187.A2 F57 1999
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- List of Abbreviations
- I Overview
- II Vulnerabilities
- III Addressing the Emergency
- IV Monetary and Credit Policies
- V Bank Restructuring
- VI Institutional Reform
- VII Financial Sector Reforms in IMF-Supported Programs
- VIII Conclusions and Lessons
- I Indonesia
- II Korea
- III Malaysia
- IV The Philippines
- V Thailand
- 6. Summary of Measures to Address the Financial Sector Turmoil
- 7. Mergers, Closures, and State Interventions of Financial Institutions
- 8. Framework for Managing Impaired Assets
- 9. Public Asset Management Companies in the Asian Crisis Countries
- 10. Pros and Cons of Decentralized Asset Management
- 11. Authorities’ Estimates for the Gross Cost of Financial Sector Restructuring
- 12. Instruments Used to Recapitalized and Purchase Nonperforming Loans
The following symbols have been used throughout this paper:
- … to indicate that data are not available;
- — to indicate that the figure is zero or less than half the final digit shown, or that the item does not exist;
- - between years or months (e.g., 1994–95 or January-June) to indicate the years or months covered, including the beginning and ending years or months;
- / between years (e.g., 1994/95) to indicate a fiscal (financial) year.
“Billion” means a thousand million.
Minor discrepancies between constituent figures and totals are due to rounding.
The term “country,” as used in this paper, does not in all cases refer to a territorial entity that is a state as understood by international law and practice; the term also covers some territorial entities that are not states, but for which statistical data are maintained and provided internationally on a separate and independent basis.
This paper reviews the policy responses of Indonesia, Korea, and Thailand to the Asian crisis that erupted in 1997 and compares the actions of these three countries with those of Malaysia and the Philippines, which were buffeted by the crisis. Although work is still under way in all the affected countries, and thus any judgments are necessarily tentative, important lessons can be learned from the various experiences of the last two years.
The paper reflects these lessons and the emerging policies of the IMF’s Monetary and Exchange Affairs Department (MAE). The material in this paper was originally prepared for discussion in the IMF’s Executive Board in early September 1999. It was prepared under the direction of Stefan Ingves, Director of MAE, by a staff team led by Carl-Johan Lindgren and consisting of Tomás J.T. Baliño and Charles Enoch (who have been leading the department’s work in Thailand, Korea, and Indonesia, respectively), Anne-Marie Gulde, Marc Quintyn, and Leslie Teo. Elena Budreckaite and Kiran Sastry provided research assistance, and Charmane Ahmed and Janet Stanford secretarial support. Jeff Hayden of the External Relations Department edited the report and coordinated its publication. The team benefited from contributions of numerous other MAE staff members involved in the department’s work in the five countries, as is acknowledged in Appendices I–V. The paper thus reflects the hands-on experience of the MAE staff and experts involved.
The paper has also benefited from comments of the IMF’s Executive Directors, colleagues in MAE, the Asia and Pacific Department (APD), and other departments in the IMF, as well as from colleagues in the World Bank. The views expressed in the paper are those of the IMF staff and do not necessarily reflect the views of the national authorities or IMF Executive Directors.
List of Abbreviations
Asian Development Bank
Banking and Financial Institutions Act (Malaysia)
Bankers Association of the Philippines
Bank Pembangunan Indonesia
Bangkok Bank of Commerce
Bank Central Asia (Indonesia)
Bank Dagang Nasional Indonesia
Bangkok International Banking Facilities
Base lending rate (Malaysia)
Bangkok Metropolitan Bank (Thailand)
Bank Negara Indonesia
Bank Rakyat Indonesia
Bank Talringhan Nasional (Indonesia)
Capital, asset, management, equity, liquidity
Corporate Debt Restructuring Committee (Malaysia)
Corporate Restructuring Agreement (Korea)
Corporate Restructuring Coordinating Committee (Korea)
Development Bank of the Philippines
Financial Institutions Development Fund (Thailand)
Financial Restructuring Advisory Committee (Thailand)
Financial Sector Restructuring Agency (Thailand)
Financial Supervisory Commission (Korea)
Financial Supervisory Service (Korea)
Indonesian Bank Restructuring Agency
Korean Asset Management Corporation
Korean Development Bank
Korea Deposit Insurance Corporation
Korea Export-Import Bank
Krung Thai Bank (Thailand)
Krung Thai Thanakit (Thailand)
National Investment Fund (Korea)
Philippine Deposit Insurance Corporation
Securities and Exchange Commission
Steering Committee on Restructuring (Malaysia)