Boon or Burden? The Effect of Private Sector Debt on the Risk of Sovereign Default in Developing Countries

Oya Celasun and Philipp Harms

No 16, Proceedings of the German Development Economics Conference, Zurich 2008 from Verein für Socialpolitik, Research Committee Development Economics

Abstract: We explore how the share of the private sector in total external debt affects perceived creditworthiness and the likelihood of sovereign default in developing countries. While there are theoretical arguments both in favor and against a stabilizing role of private-sector borrowing, the evidence clearly supports the notion that a greater share of the private sector in total external debt is associated with a reduced likelihood of sovereign default.

Keywords: International Investment; Sovereign Risk (search for similar items in EconPapers)
JEL-codes: F34 O16 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: BOON OR BURDEN? THE EFFECT OF PRIVATE SECTOR DEBT ON THE RISK OF SOVEREIGN DEFAULT IN DEVELOPING COUNTRIES (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:gdec08:16

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