The longer they are not taken, the longer troubled banks will continue incurring losses, engaging in risky practices, threatening the safe institutions, generating contagion effects, and not performing the banks’ all-important maturity transformation function.
Indeed, here is a way foreign capital flows can be part of the solution to the problem, because new foreign-owned banks that can perform this maturity transformation function can be invited to participate in credit-starved economies. •  Maturity transformation. While financial institutions perform maturity transformation, there is no reason to unduly burden the system.