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The paper suggests that when firms differ stochastically in their productivity, a bank may find it optimal not to bail out the failed nonconglomerate firms at all, but to bail out conglomerates fully. Expectation of such bailout policy may encourage risk-averse firms to join a conglomerate to minimize the risk of liquidation. Furthermore, in case of private information, bad firms follow good firms’ decision on conglomeration to hide their type. Finally, the paper discusses the impact of conglomeration on the debt-equity ratio and the expansion of existing conglomerates through mergers and acquisitions.

Banks and Banking --- Investments: Stocks --- Labor --- Production and Operations Management --- Bankruptcy --- Liquidation --- Firm Organization and Market Structure --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Labor Demand --- Financial Institutions and Services: Government Policy and Regulation --- Macroeconomics: Production --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Banking --- Labour --- income economics --- Economic & financial crises & disasters --- Macroeconomics --- Investment & securities --- Self-employment --- Bank bailouts --- Productivity --- Stocks --- Banks and banking --- Self-employed --- Crisis management --- Industrial productivity --- Income economics

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This paper presents a general equilibrium model of interenterprise arrears, characterized by n-stage production technology with random productivity shocks. The model shows that large interenterprise arrears in transition economies may reflect substantial business risks in those countries and that rapid privatization and commercialization may contribute to a huge initial accumulation of trade credits and arrears. The paper also suggests that administrative measures aimed at immediate reduction of IEA such as imposition of prepayments and penalty charges, would not be as effective as partial equilibrium frameworks suggest. Consequently, a fundamental solution should be sought instead in reducing business risks or improving enterprise information. Finally, the paper discusses the relevance of the model to Russian experience in 1993 and 1994.

Econometrics --- Exports and Imports --- Macroeconomics --- Money and Monetary Policy --- General Equilibrium and Disequilibrium: General --- Monetary Policy --- Socialist Institutions and Their Transitions: Financial Economics --- Comparative Analysis of Economic Systems --- International Lending and Debt Problems --- Comparison of Public and Private Enterprises and Nonprofit Institutions --- Privatization --- Contracting Out --- Computable and Other Applied General Equilibrium Models --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- International economics --- Econometrics & economic statistics --- Monetary economics --- Trade credits --- Arrears --- General equilibrium models --- Monetary base --- External debt --- Economic sectors --- Econometric analysis --- Money --- Debts, External --- Econometric models --- Money supply --- Russian Federation

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This paper proposes that international rescue financing should not be provided to a country where a crisis first occurs, but rather to any country that suffers a subsequent crisis. Such a timing-based lending facility can be Pareto-superior to both laissez-faire and existing international crisis lending facilities, when domestic governments have more information on their own economies than does the international lender of last resort. The new facility mitigates moral hazard owing to information asymmetry by not rescuing the first-hit country. At the same time, it limits crisis contagion by rescuing countries in subsequent crises. Even in the presence of common shocks, the timing-based facility can reduce global risks of crisis because it induces countries to undertake greater crisis-prevention efforts so as not to become the first country hit.

Economic assistance. --- Financial crises. --- International Monetary Fund. --- Moral hazard. --- Business & Economics --- Economic History --- Crashes, Financial --- Crises, Financial --- Financial crashes --- Financial panics --- Panics (Finance) --- Stock exchange crashes --- Stock market panics --- Economic aid --- Foreign aid program --- Foreign assistance --- Grants-in-aid, International --- International economic assistance --- International grants-in-aid --- Internationaal monetair fonds --- International monetary fund --- Risk (Insurance) --- Crises --- Economic policy --- International economic relations --- Conditionality (International relations) --- Finance: General --- Financial Risk Management --- Production and Operations Management --- International Monetary Arrangements and Institutions --- International Lending and Debt Problems --- Financial Institutions and Services: Government Policy and Regulation --- General Financial Markets: Government Policy and Regulation --- Financial Crises --- Macroeconomics: Production --- Economic & financial crises & disasters --- Finance --- Macroeconomics --- Crisis prevention --- Moral hazard --- Financial crises --- Productivity --- Lender of last resort --- Financial sector policy and analysis --- Production --- Crisis management --- Financial risk management --- Industrial productivity --- Banks and banking, Central --- Argentina

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This paper addresses the growth, welfare, and distributional effects of credit markets. We construct a general equilibrium model where human capital is the engine of growth and individuals differ in their education abilities. We argue that the existence of credit markets encourages specialization, by which individuals choose during their youth to work or to receive formal education. This specialization unambiguously increases growth and welfare. The model also shows that in economies with high (low) average level of education abilities, the opening of credit markets induces a more disperse (equal) income distribution.

Capacity --- Capital accumulation --- Capital --- Consumption --- Credit --- Economics --- Education --- Education: General --- Human Capital --- Human capital --- Income economics --- Intangible Capital --- Investment --- Investments: General --- Labor Productivity --- Labor --- Labour --- Macroeconomics --- Macroeconomics: Consumption --- Monetary economics --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Money and Monetary Policy --- Occupational Choice --- Saving and investment --- Saving --- Skills --- Wealth

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Edited by David T. Coe and Se-Jik Kim, this volume contains papers presented at a May 2001 conference in Seoul sponsored by the IMF and the Korea Institute for International Economic Policy on the Korean Crisis and Recovery. The papers examine the response to the 1997 crisis, its long-term impact on growth, and the state of financial and corporate sector reforms. Authors include academics, Korean policymakers, and IMF and World Bank staff involved in the Korean program.

Financial crises --- Interest rates --- Corporate reorganizations --- Labor market --- Corporate governance --- Crises financières --- Taux d'intérêt --- Entreprises --- Marché du travail --- Gouvernement d'entreprise --- Congresses --- Congrès --- Réorganisation --- -Corporate reorganizations --- -Financial crises --- -Interest rates --- -339.72 --- 336.1 <519.5> --- K9400.80 --- K9415 --- K9480 --- K9486 --- -KR / South Korea - Zuid Korea - Corée du Sud --- 331.31 --- 333.481 --- 331.33 --- -Labor market --- -Corporate governance --- -330.95195 --- Governance, Corporate --- Industrial management --- Directors of corporations --- Employees --- Market, Labor --- Supply and demand for labor --- Markets --- Corporations --- Reorganization of corporations --- Consolidation and merger of corporations --- Money market rates --- Rate of interest --- Rates, Interest --- Interest --- Crashes, Financial --- Crises, Financial --- Financial crashes --- Financial panics --- Panics (Finance) --- Stock exchange crashes --- Stock market panics --- Crises --- Business cycles --- Internationaal betalingsverkeer. Valutahandel. Wisselmarkten. Deviezenhandel. Internationale kapitaalmarkt. Flow and funds analysis. Betalingsbalans. Internationale geldmarkt. --- Public finance, government finance in general--Zuid Korea --- Korea: Economy and industry -- history -- modern period, postwar period (1945- ) --- Korea: Economy and industry -- business methods and management --- Korea: Economy and industry -- finance industries --- Korea: Economy and industry -- finance -- banking --- Economisch beleid. --- Monetaire crisissen, hervormingen, saneringen en stabilisering. --- Structureel beleid. Reglementering. Dereglementering. Ordnungspolitik. --- Supply and demand --- Reorganization --- 336.1 <519.5> Public finance, government finance in general--Zuid Korea --- 339.72 Internationaal betalingsverkeer. Valutahandel. Wisselmarkten. Deviezenhandel. Internationale kapitaalmarkt. Flow and funds analysis. Betalingsbalans. Internationale geldmarkt. --- Crises financières --- Taux d'intérêt --- Marché du travail --- Congrès --- Réorganisation --- Congresses. --- 330.95195 --- KR / South Korea - Zuid Korea - Corée du Sud --- 339.72 --- Economisch beleid --- Structureel beleid. Reglementering. Dereglementering. Ordnungspolitik --- Monetaire crisissen, hervormingen, saneringen en stabilisering --- Internationaal betalingsverkeer. Valutahandel. Wisselmarkten. Deviezenhandel. Internationale kapitaalmarkt. Flow and funds analysis. Betalingsbalans. Internationale geldmarkt --- Banks and Banking --- Financial Risk Management --- Foreign Exchange --- Investments: Bonds --- Labor --- Macroeconomics --- General Financial Markets: General (includes Measurement and Data) --- Financial Crises --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Interest Rates: Determination, Term Structure, and Effects --- Economic & financial crises & disasters --- Labour --- income economics --- Currency --- Foreign exchange --- Investment & securities --- Banking --- Monetary economics --- Exchange rates --- Corporate bonds --- Currency crises --- Financial institutions --- Corporate sector --- Economic sectors --- Bonds --- Banks and banking --- Korea, Republic of --- Income economics