BANKING REFORM IN ASIA: A PROGRESS REPORT

This article surveys and quantifies the progress made by five Asian economies during the period 1997-1999 in the reform and restructuring of their banking systems, paying particular attention to the very different circumstances and policy solutions in each of them. It develops a simple and objective scoring system of the progress achieved-one that puts South Korea at the top, Japan and Malaysia in the middle, and Thailand and Indonesia at the bottom. The relative success achieved in South Korea and Malaysia is attributed in part to their establishment of "Asset Management Corporations," bodies charged with buying non-performing loans, managing (and in some cases restructuring) the assets underlying the loans, and eventually reselling the loans. This practice has allowed for a more direct approach to corporate restructuring. 1999 Morgan Stanley.