A decentralized approach insulates financial decisions from politics, provides equal treatment for all creditors, and compels banks to examine the origins of bad debt and to improve their risk-analysis methods. This prescription thus treats the symptoms as well as the disease. Together with improving bank supervision, it serves as a basis for restrained optimism about Poland's economic transformation. Fruit Positive trends in the banking industry are already evident. The debt-restructuring law was viewed by the treasury as a tool for improving the financial standing of banks and boosting their market value, and prospects for this outcome are good.
Banks appear to have viewed the state support implicit in the law as a one-time event.
Lending procedures and methods for weighing risk are improving in most banks. Banks have also learned that they must constantly monitor the status of their outstanding loans. Early data from seven commercial banks offer a snapshot of progress to date. From the perspective of the banks, bank-enterprise conciliation procedures offered clear advantages. Conciliation encouraged debtors to seize the initiative in restructuring while granting banks substantial leverage to deal with laggard firms.