Creditors have no incentive to accept realistic write-downs, preferring instead to reschedule loans and reflect them as performing loans in their books. So supply of fresh credit remains weak. After the crisis some Asian countries have passed new bankruptcy laws, and even established new courts to administer them. But enforcement continues to be difficult. As Acting Governor of Bank Indonesia Anwar Nasution said, in explaining the slow pace of corporate restructuring (this was when he was the Senior Deputy Governor): “it will take a while, partly because we have a very rotten legal and accounting system … the most important thing is that we have very weak bankruptcy procedures.”3 The social values of each country underpin the formal structure of laws and institutions. A relationship-based approach towards doing business is part of the culture of most Asian societies. Few Asian societies have the “contract-based” commercial culture of the West, particularly the US, with its robust emphasis on legal and impersonal obligations. Few have made a practice of separating the ownership of firms from their management. In some countries, there are close ties between the state, the banks and industry, e.g. the state-owned enterprises in China, and the chaebols in Korea. All over the region, family-based firms and conglomerates are the norm, especially in banking. Companies in the same group would do business with one another, maintaining trust on the basis of family ties and shared ownership.

Finance is one of the largest sectors of the UK economy. Around 400,000 people are employed in financial 3  services in London alone, 1.1 million across the country as whole. Their enterprise contributes £ billion to our national income, £ billion to our exports and £ billion to the Exchequer, equivalent to two-thirds of the NHS budget. 4  Your work matters because finance is not an end in itself; financial markets serve the real economy. By financing firms that hire, invest and expand, markets drive growth. By opening up cross border trade and investment, they create new opportunities for businesses and savers. By transferring risks to those most willing and able to bear them, markets help households and businesses insure against the unexpected. 1  See Fair and Effective Markets Review Final Report, HM Treasury, Bank of England and FCA (June 2015). At: http://www.bankofengland.co.uk/markets/Pages/fmreview.aspx 2 See BIS Triennial Bank Survey (at http://www.bis.org/publ/rpfx16fx.pdf) and BIS OTC data at (https://www.bis.org/statistics/d12_1.pdf) and The City UK “Key facts about the UK as an international financial centre” (November 2016). 3 Workforce jobs and financial services jobs in London (ONS). 4 GDP and exports data (ONS), tax revenues from PWC/City of London “Total Tax Contribution of UK Financial Services” and NHS Budget data at: http://www.nhs.uk/NHSEngland/thenhs/about/Pages/overview.aspx. 2  All speeches are available online at www.bankofengland.co.uk/speeches  2  Most fundamentally, your work matters because markets are the best mechanism to drive innovation, productivity, and prosperity. The Problem  Though markets are generally a force for good, markets can go wrong.