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Bank‐led restructuring in Poland: the conciliation process in action1

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  • Cheryl W. Gray
  • Arnold Holle

Abstract

Poland's 1993 Enterprise and Bank Restructuring Programme (EBRP) tried to force state‐owned commercial banks to build institutional capacity and resolve their problem loans. The outcome of its innovative bank‐led workout (‘conciliation’) process, documented in this study of 62 firms, is decidedly mixed. The EBRP forced banks to confront their problems, helped them to build instituional capacity in their workout units, and furthered the difficult task of weeding out and closing clearly unviable firms. Yet it had limited power to promote needed restructuring or privatization in firms. The conciliation agreements were relatively unsophisticated and include few tangible requirements for operational or management change. The first two years of implementation saw a slowdown (over earlier years) in the rate of layoffs, a decline in average operating profitablility, and very little real privatization. The main impact of conciliation appears to have been to reduce debt service and thereby give firms ‘breathing room’.

Suggested Citation

  • Cheryl W. Gray & Arnold Holle, 1996. "Bank‐led restructuring in Poland: the conciliation process in action1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 4(2), pages 349-370, October.
    • Handle: RePEc:bla:etrans:v:4:y:1996:i:2:p:349-370
    DOI: 10.1111/j.1468-0351.1996.tb00177.x
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    References listed on IDEAS

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    1. Pinto, Brian & Belka, Marek & Krajewski, Stefan, 1993. "Transforming state enterprises in Poland : macroeconomic evidence on adjustment," Policy Research Working Paper Series 1101, The World Bank.
    2. M Belka & S Estrin & M Schaffer & I.J. Singh, 1995. "Enterprise Adjustment in Poland: Evidence from a Survey of 200 Private," CEP Discussion Papers dp0233, Centre for Economic Performance, LSE.
    3. Belka, M. & Estrin, Saul & Schaffer, M. E. & Singh, I. J., 1995. "Enterprise adjustment in Poland: evidence from a survey of 200 private, privatised, and state-owned firms," LSE Research Online Documents on Economics 20765, London School of Economics and Political Science, LSE Library.
    4. Brian Pinto & Marek Belka & Stefan Krajewski, 1993. "Transforming State Enterprises in Poland: Evidence on Adjustment by Manufacturing Firms," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 24(1), pages 213-270.
    5. Gray, Cheryl W. & Holle, Arnold, 1996. "Bank-led restructuring in Poland : an empirical look at the bank conciliation process," Policy Research Working Paper Series 1650, The World Bank.
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    2. Ulrich Thießen, 2004. "Financial System Development, Regulation and Economic Growth: Evidence from Russia," Discussion Papers of DIW Berlin 400, DIW Berlin, German Institute for Economic Research.
    3. Alfred Steinherr & Ali Tukel & Murat Ucer, 2004. "The Turkish Banking Sector, Challenges and Outlook in Transition to EU Membership," Bruges European Economic Policy Briefings 9, European Economic Studies Department, College of Europe.
    4. John Bonin & Bozena Leven, 2001. "Can State-owned Banks Promote Enterprise Restructuring? Evidence from One Polish Bank's Experience," Post-Communist Economies, Taylor & Francis Journals, vol. 13(4), pages 431-443.
    5. Steinherr, Alfred & Tukel, Ali & Ucer, Murat, 2004. "The Turkish Banking Sector - Challenges And Outlook In Transition To Eu Membership," Economic and Financial Reports 2004/2, European Investment Bank, Economics Department.
    6. Shi, Jinzhao & Guo, Ju'e & Du, Qiang & Lin, Feng & Lai, Kin Keung & Cheng, T.C.E., 2020. "Optimal financing mode selection for a capital-constrained retailer under an implicit bankruptcy cost," International Journal of Production Economics, Elsevier, vol. 228(C).

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