the case for real estate assets, where fire sale losses need not imply an economic loss of value. At the same time, selling assets rapidly establishes floor prices that will promote a speedier recovery from the economic crisis. This may especially be so for public AMCs which typically have limited market insights.

**_Evaluating the success_** _of centralized AMCs._ The success of centralized AMCs can be assessed on two dimensions: (i) Did they achieve their narrow objectives for which they were set up; and (ii) at a broader level, did the banking system return to solvency, did banking problems not reappear, and did credit extension resume as banks are presumably cleaned up and the problem of recuperating bad loans is decoupled from the business of making fresh loans.'<sup>4</sup>

**_Narrow objectives_** _of AMCs._ The success of rapid asset disposition and liquidation agencies will be measured by the speed of asset disposition. Here, an AMC is judged to be successful if assets, including banks, are disposed of rapidly that is within a five year timeframe. In the case of restructuring agencies it is more difficult to gauge whether they have indeed achieved their narrow objectives of accelerating corporate restructuring-because of the dearth of data and lack of the counterfactual. Thus, they will be considered successful if they sold off 50 percent of their assets within a five year time frame, indicating that the existence of a public AMC did not delay corporate restructuring.

**_Broader objectives._** To assess whether AMCs accomplished their broader objectives of restoring the banking system back to health, two criteria are used: (i) did the financial system/or bank experience repeated financial distress; and (ii) did real credit to the private sector resume and was aggregate credit growth positive in real terms?

# **II. Cross Country Experience**

**_Sample Selection and Information Sources._** While setting up centralized asset management companies has become a popular component of banking distress resolution strategies in the recent East Asian financial crises-Indonesia, Malaysia and Korea all set up centralized AMC structures-they were a less frequently used tool in the past. According to a survey of 26 banking crises<sup>1 5</sup> , centralized AMC structures were only set up in nine cases. AMCs proved to be particularly popular in Africa as four out of the nine AMCs were launched in Africa.,<sup>6</sup> Out of these nine, seven cases, where sufficient data was publicly available, were selected for more detailed analysis. In four out of the seven cases (Mexico 1994; Philippines 1981-86, Spain 1977-85; US 1984-91); the governments set up rapid asset disposition vehicles, and in three cases (Finland 1991-94; Ghana 1982-89; Sweden 1991-94) restructuring agencies were established. As data sources, published reports, Annual Reports of AMCs if available or World Bank reports, or interviews with experts familiar with the individual cases were employed.

> **14** Some facilities also pursued the explicit objective to minimize fiscal costs. However, as we do not have information as to the counterfactual, we cannot evaluate whether AMCs have achieved that objective. **15** Caprio/Klingebiel 1996.

> **16** Benin, Cote d' Ivoire, Ghana and Senegal all set up centralized AMCs as part of their bank restructuring mechanisms. The other cases were Finland, Philippines, Spain, the US, and Uruguay.

8