NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Bank Exposure, Capital and Secondary Market Discounts on the Developing Country Debt

Sule Ozler, Harry Huizinga

NBER Working Paper No. 3961
Issued in January 1992
NBER Program(s):      ITI   IFM

Previous empirical studies of secondary market discounts for developing countries have ignored important creditor country factors. The empirical evidence in this paper indicates that, after controlling for repayment indicators of borrower countries, bank exposure and capital are important determinants of secondary market discounts: an increase in the exposure of large banks to a particular country leads to a decrease in the secondary market discounts on the debt of that country, while an increase in the capital of large banks leads to an increase in secondary market discounts. Among the repayment indicators of developing countries, only debt ratios are found to be significant determinants of the discounts. We suggest that the impacts of exposure and capital can be explained by the presence of deposit insurance. The evidence presented on the stock market pricing of lender banks supports this view.

download in pdf format
   (218 K)

email paper

This paper is available as PDF (218 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Users who downloaded this paper also downloaded these:
Fernández and Ozler w3654 Debt Concentration and Secondary Markets Prices: A Theoretical and Empirical Analysis
Floud, Wachter, and Gregory w1661 The Physical State of the British Working Class, 1870-1914: Evidence from Army Recruits
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us