Several countries which suffered a crisis in the 1990s including three Scandinavian countries, Mexico, Thailand and Malaysia all went through a period of negative growth lasting for one or two years. However, a deep economic downturn is likely to act as an obstacle to successful restructuring.
If a company or a financial institution is to improve its financial structure, it should pay back its debt by realizing profits or increasing its capital through a public offering. During a recession, such attempts do not yield the desired outcomes. Moreover, since job mobility decreases significantly in a recession, bold management rationalization which inevitably entails large-scale job shedding, is difficult to carry out.