Freedom proves Nordic pitfall
Article Abstract:
Bank deregulation in Sweden, Norway and Finland has resulted in a financial crisis in the region. The removal of banking restrictions prompted a rash of risky investments that resulted in losses and bad debts. Loans made in these countries grew between 20-25% annually during the eighties, due largely to the economic boom. Unfortunately, these were made mostly to property developers and finance companies that were hardest hit by the recession. Of all three banking communities, the Finnish industry was the least prepared and the government has been forced to allot 20 billion Finnish markkas to revive it. In the short-term, cost reduction, improvement of credit controls, stricter supervision and asset restructuring are the measures available to banks to ride out the crisis. To ensure long-term survival however, Nordic governments might have to bail-out the big banks.
Publication Name: International Management
Subject: Business, international
ISSN: 0020-7888
Year: 1992
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Reluctant redeemer
Article Abstract:
The low-profile European Investment Bank (EIB) was thrust into the limelight when EC leaders decided to use it as one of the vehicles for reviving Europe's declining economy. It was decided that the EC's lending arm will provide the five billion European currency unit needed to finance infrastructure projects in the region and to establish an investment fund to guarantee further capital investments. This decision places EIB in an uncomfortable position as Europe's economic savior. It also puts political pressure on the bank to relax its stringent banking standards to accommodate the Community's cash-strapped governments. EIB president Ernst-Gunther Broder cautions against efforts to transform the institution into a soft-loan organization, stressing the need for it to remain a bank and not an equity provider.
Publication Name: International Management
Subject: Business, international
ISSN: 0020-7888
Year: 1993
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Europe struggles for growth
Article Abstract:
European companies face a bleak 1993 with forecasts for the year indicating little economic growth, rising unemployment and dismal company profits. The Community's economy is expected to grow by only 1% and the proportion of jobless is likely to rise to 11%. Meanwhile, mean corporate earnings have dropped even lower than 1991's 2%. Europe is in deep recession which is not likely to end in the immediate future. There is no significant fiscal boost to the economy in the offing for Italy, Germany, Spain and the UK given the size of their budget deficits. Of all EC member nations, the UK is the hardest hit by the recession while Germany is the least. Many are hoping the slowly recovering American economy and the possibility of a reduction in German interest rates will bring Europe out of its economic slump.
Publication Name: International Management
Subject: Business, international
ISSN: 0020-7888
Year: 1993
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