A free lunch for Emerging Markets: Removing international financial market imperfections with modern finance instruments

Christian Bauer (), Bernhard Herz () and Stefan Hoops ()

Macroeconomics from Department of Economics, Economics I, Bayreuth University

Abstract: Regulations and frictions of the market for emerging market bonds keep up the price of capital demanded by emerging countries. Instruments of modern finance, i.e. a pool of emerging market bonds refinanced via an enhanced Asset Backed Securities structure, can significantly reduce the interest payments. In an extensive simulation study based on empirical data, the cumulated interest savings for a horizon of 10 years amount to up to 44% of the credit sum. The theoretical structure of the transaction is explicitly derived in cooperation with professionals from major commercial banks and thus realistic. The implementation is costless and does neither require institutional reforms nor debt forgiveness and is in line with market forces.

Keywords: Emerging Markets; financial market imperfections; finance instruments; debt crises; asset backed securities (ABS) (search for similar items in EconPapers)
JEL-codes: H63 F34 G (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe
Date: 2006-11
View list of references

Downloads: (external link)
http://www.giw.uni-bayreuth.de/workingpapers/bauer/freelunch.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:uba:hadfwe:emerging-markets-bauer-herz-hoops-2006-11

Access Statistics for this paper

More papers in Macroeconomics from Department of Economics, Economics I, Bayreuth University
Contact information at EDIRC.
Series data maintained by Christian Bauer ().