Bonds or Loans? The Effect of Macroeconomic Fundamentals

Galina Hale

No 1403, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: The costs of debt crises are not invariant to the foreign debt instrument composition: bank loans or bonds. The lending boom of the 1990s witnessed considerable variation over time and across countries in the debt instrument used by emerging market (EM) borrowers. This paper tests how macroeconomic fundamentals affect the composition of international debt instruments used by EM borrowers. Analysis of micro-level data using ordered probability model shows that macroeconomic fundamentals explain a significant share of variation in the ratio of bonds to loans for private borrowers, but not for the sovereigns.

Keywords: Emerging markets; Foreign debt; Debt composition; Country risk (search for similar items in EconPapers)
JEL-codes: F34 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2003-02, Revised 2005-09
New Economics Papers: this item is included in nep-fin and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Bonds or Loans? the Effect of Macroeconomic Fundamentals (2007)
Working Paper: Bonds or Loans? The Effect of Macroeconomic Fundamentals (2007)
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