NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

LDC Borrowing with Default Risk

Jeffrey Sachs, Daniel Cohen

NBER Working Paper No. 925
Issued in July 1982
NBER Program(s):   ITI   IFM

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

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Document Object Identifier (DOI): 10.3386/w0925

Published: Kredit and Kapital, 1985

 
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