Lending Booms, Reserves, and the Sustainability of Short-Term Debt: Inferences from the Pricing of Syndicated Bank Loans

Barry Eichengreen and Ashoka Mody

No 7113, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper analyzes the determinants of spreads on syndicated bank lending to emerging markets, treating the loan-extension and pricing decisions as jointly determined. Compared to the bond market, our findings highlight the role of international banks in providing credit to smaller borrowers about whom information is least complete and, more generally, support the interpretation of bank finance as dominating that segment of international financial markets characterized by the most pronounced information asymmetries. Domestic lending booms and low reserves in relation to short-term debt have been priced in the expected manner by international banks. The high level of short-term debt in East Asia was supported by high growth rates but was characterized by a knife-edge quality.

JEL-codes: F3 (search for similar items in EconPapers)
Date: 1999-05
New Economics Papers: this item is included in nep-mon and nep-pke
Note: IFM ME
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Citations: View citations in EconPapers (19)

Published as Eichengreen, Barry and Ashoka Mody. "Lending Booms, Reserves And The Sustainability Of Short-Term Debt: Inferences From The Pricing Of Syndicated Bank Loans," Journal of Development Economics, 2000, v63(1,Oct), 5-44.

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Journal Article: Lending booms, reserves and the sustainability of short-term debt: inferences from the pricing of syndicated bank loans (2000)
Working Paper: Lending booms, reserves, and the sustainability of short-term debt - inferences from the pricing of syndicated bank loans (1999)
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