Policy Implications of the Polish Enterprise and Bank Restructuring Program

Abstract

The Polish Enterprise and Bank Restructuring Program deserves thorough study for a number of reasons. Most importantly, it was an audacious program to implement the notion that banks are best placed to harden the budget constraint on enterprises and control the industrial restructuring process during transition. In the first four chapters, this dissertation outlined a theoretical basis for this program, the academic and expert debate which preceded it, assessed the problem it set out to solve, and explicated the tools it used and the new instruments it created. One fundamental realization to be gleaned from game theory is — assuming enterprise managers abhor restructuring, have a short term perspective, but a significant influence on the choice of resolution path — the restructuring outcome of bank conciliation can only be marginally better than any other procedure the managers could have steered their enterprise to.¹ Therefore, any analysis of the entire program cannot focus only on the bank-conciliation procedure, but must also in great detail consider the other avenues open to banks and enterprises. Having attempted to accomplish both, the policy implications of the findings are described in this chapter.