The Baring Crisis and the Great Latin American Meltdown of the 1890s

Kris James Mitchener and Marc D. Weidenmier

The Journal of Economic History, 2008, vol. 68, issue 2, 462-500

Abstract: The Baring Crisis is the nineteenth century's most famous sovereign debt crisis. Using a database of more than 15,000 observations, we assess its effect on emerging market borrowers and find empirical evidence of a regional crisis but not a global crisis. During the crisis, Latin American yield spreads increased by more than 200 basis points relative to the rest of the world, even after controlling for macroeconomic, trade, political-institutional factors, and other country-specific effects. Our evidence suggests that European investors may have sold off or reduced their holdings of Latin American securities in the wake of the Baring Crisis.

Date: 2008
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