On the role of commercial banks in enterprise restructuring: the Polish example

We argue both against government-led gradualism and against wholesale application of bankruptcy in dealing with loss-making SOEs. Instead, an incentive framework and legal environment should be created for the major nongovernment creditors to initiate restructuring. The details of such an environment are laid out using the recent Polish enterprise reform program. Naturally, assigning such an important role to commercial banks makes financial sector reform commensurately more urgent. The success of the Polish financial and enterprise reform package suggests that the decentralized, nongovernment approach to dealing with loss-making SOEs promoted here has a chance of success.