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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Resolving Bank Failures in Uganda: Policy Lessons from Recent Bank Failures
Author:Brownbridge, MartinISNI
Year:2002
Periodical:Development Policy Review
Volume:20
Issue:3
Period:July
Pages:279-291
Language:English
Geographic term:Uganda
Subjects:banking
Economics and Trade
External link:https://doi.org/10.1111/1467-7679.00171
Abstract:In 1998/1999 the central bank in Uganda intervened in four insolvent commercial banks. One bank was closed promptly while the other three were all subject to some form of attempted open bank resolution before eventual closure. This article examines the lessons from this experience and concludes that, in general, prompt closure is preferable to open resolution. This is because the losses incurred by distressed banks are likely to be much greater than the estimates made by regulators or auditors prior to closure, while the prospects for recapitalization by private sector shareholders are likely to be very limited at best. Open resolution entails serious dangers of moral hazard, which increase the eventual cost to depositors and taxpayers. Bibliogr., notes, ref., sum. [Journal abstract]
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