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Optimal design of bank bailouts: the case of transition economies

In most recent banking crises bank regulators have been caught off their guard and have been forced to respond to the crisis in a hurry without the support of an institutional or legal framework designed to deal with bank failures. This is in sharp contrast with the non-financial sector, where a detailed and elaborate bankruptcy law governs the process of liquidation or reorganisation of financially distressed firms. In this paper we address the question of how to design a bankruptcy institution for banks that would serve a similar purpose as existing bankruptcy laws for non-financial firms.

Link	http://www.ebrd.org/pubs/econo/wp0032.htm
Author	Aghion, Ph., Bolton, P., Fries, S
Date	01-Apr-1998
Institute	EBRD
Tags	bankrupcy, firm, transition, enterprise, bank, Poland, Hungary, Slovenia