LDC Borrowing with Default Risk

Jeffrey Sachs and Daniel Cohen

No 925, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper presents a theoretical model to describe the effects of default risk on international lending to LDC sovereign borrowers. The threat of defaults in international lending is shown to give rise to many characteristics of the syndicated loan market: (1) quantity rationing of loans; (2) LDC policies designed to enhance creditworthiness; (3) prevalence of short maturities on international loans; and (4) a prevalence of bank lending relative to bond-market lending

Date: 1982-07
Note: ITI IFM
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Citations: View citations in EconPapers (76)

Published as Kredit and Kapital, 1985

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