TY  - JOUR
AU  - Hermalin,Benjamin E.
AU  - Rose,Andrew K.
TI  - Risks to Lenders and Borrowers in International Capital Markets
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6886
PY  - 1999
Y2  - January 1999
UR  - http://www.nber.org/papers/w6886
L1  - http://www.nber.org/papers/w6886.pdf
N1  - Author contact info:
Benjamin Hermalin
Walter Haas School of Business
545 Student Services Building, #1900
University of California
Berkeley, CA  94720-0001
Tel: (510) 642-7575
Fax: (510) 643-1420
E-Mail: hermalin@haas.berkeley.edu

Andrew K. Rose
Haas School of Business Administration
University of California, Berkeley
Berkeley, CA 94720-1900
Tel: 510/642-6609
Fax: 510/642-4700
E-Mail: arose@haas.berkeley.edu
M1  - published as Benjamin Hermalin, Andrew K. Rose, Peter M. Garber, Andrew Crockett, David W. Mullins, Jr. "Risks to Lenders and Borrowers in International Capital Markets," in Martin Feldstein, editor, "International Capital Flows" University of Chicago Press (1999)

AB  - This paper provides a framework for understanding the risks to borrowers and lenders in capital markets.  We begin with a description of a capital markets in a domestic context.  This allows us to focus on two key imperfections which lie at the heart of all financial systems: imperfect information, and the difficulty of making credible commitments for repayment.  In the international context, these problems tend to be exacerbated. There are also two sources of risk in international borrowing that are absent in a purely domestic context: the risk that sovereign borrowers will default, and the risk of macroeconomic instability that stems from the impact of net capital flows on the monetary system.
ER  -