Sovereign Default Risk and Private Sector Access to Capital in Emerging Markets
Title | Sovereign Default Risk and Private Sector Access to Capital in Emerging Markets PDF eBook |
Author | Mr.Udaibir S. Das |
Publisher | International Monetary Fund |
Pages | 40 |
Release | 2010-01-01 |
Genre | Business & Economics |
ISBN | 1451961944 |
Top down spillovers of sovereign default risk can have serious consequences for the private sector in emerging markets. This paper analyzes the effects of these spillovers using firm-level data from 31 emerging market economies. We assess how sovereign risk affects corporate access to international capital markets, in the form of external credit (loans and bond issuances) and equity issuances. The study first analyzes the impact of sovereign debt crises during the 1980s and 1990s. It goes on to examine the 1993 to 2007 period, using additional measures of sovereign risk-sovereign bond spreads and sovereign ratings-as explanatory variables. Overall, we find that sovereign default risk is a crucial determinant of private sector access to capital, be it external debt or equity. We also find that crisis resolution patterns matter and that defaults towards private creditors have stronger adverse consequences than defaults to official creditors.
Sovereign Debt Restructurings 1950-2010
Title | Sovereign Debt Restructurings 1950-2010 PDF eBook |
Author | Mr.Udaibir S. Das |
Publisher | International Monetary Fund |
Pages | 128 |
Release | 2012-08-01 |
Genre | Business & Economics |
ISBN | 1475505531 |
This paper provides a comprehensive survey of pertinent issues on sovereign debt restructurings, based on a newly constructed database. This is the first complete dataset of sovereign restructuring cases, covering the six decades from 1950–2010; it includes 186 debt exchanges with foreign banks and bondholders, and 447 bilateral debt agreements with the Paris Club. We present new stylized facts on the outcome and process of debt restructurings, including on the size of haircuts, creditor participation, and legal aspects. In addition, the paper summarizes the relevant empirical literature, analyzes recent restructuring episodes, and discusses ongoing debates on crisis resolution mechanisms, credit default swaps, and the role of collective action clauses.
The Cost of Aggressive Sovereign Debt Policies
Title | The Cost of Aggressive Sovereign Debt Policies PDF eBook |
Author | Christoph Trebesch |
Publisher | International Monetary Fund |
Pages | 37 |
Release | 2009-02-01 |
Genre | Business & Economics |
ISBN | 1451871767 |
This paper proposes a new empirical measure of cooperative versus conflictual crisis resolution following sovereign default and debt distress. The index of government coerciveness is presented as a proxy for excusable versus inexcusable default behaviour and used to evaluate the costs of default for the domestic private sector, in particular its access to international debt markets. Our findings indicate that unilateral, aggressive sovereign debt policies lead to a strong decline in corporate access to external finance (loans and bond issuance). We conclude that coercive government actions towards external creditors can have strong signalling effects with negative spillovers on domestic firms. "Good faith" debt renegotiations may be crucial to minimize the domestic costs of sovereign defaults.
Managing the Sovereign-Bank Nexus
Title | Managing the Sovereign-Bank Nexus PDF eBook |
Author | Mr.Giovanni Dell'Ariccia |
Publisher | International Monetary Fund |
Pages | 54 |
Release | 2018-09-07 |
Genre | Business & Economics |
ISBN | 1484359623 |
This paper reviews empirical and theoretical work on the links between banks and their governments (the bank-sovereign nexus). How significant is this nexus? What do we know about it? To what extent is it a source of concern? What is the role of policy intervention? The paper concludes with a review of recent policy proposals.
Emerging Markets and Sovereign Risk
Title | Emerging Markets and Sovereign Risk PDF eBook |
Author | N. Finch |
Publisher | Springer |
Pages | 438 |
Release | 2014-12-09 |
Genre | Business & Economics |
ISBN | 1137450665 |
Emerging Markets and Sovereign Risk provides case studies, commentary and analysis on the financial risk management and measurement in the context of frontier and developing counties from international experts covering three key areas of emerging market investments, the rating sovereign risk and managing sovereign risk.
Banks, Government Bonds, and Default
Title | Banks, Government Bonds, and Default PDF eBook |
Author | Nicola Gennaioli |
Publisher | International Monetary Fund |
Pages | 53 |
Release | 2014-07-08 |
Genre | Business & Economics |
ISBN | 1498391990 |
We analyze holdings of public bonds by over 20,000 banks in 191 countries, and the role of these bonds in 20 sovereign defaults over 1998-2012. Banks hold many public bonds (on average 9% of their assets), particularly in less financially-developed countries. During sovereign defaults, banks increase their exposure to public bonds, especially large banks and when expected bond returns are high. At the bank level, bondholdings correlate negatively with subsequent lending during sovereign defaults. This correlation is mostly due to bonds acquired in pre-default years. These findings shed light on alternative theories of the sovereign default-banking crisis nexus.
Global Waves of Debt
Title | Global Waves of Debt PDF eBook |
Author | M. Ayhan Kose |
Publisher | World Bank Publications |
Pages | 403 |
Release | 2021-03-03 |
Genre | Business & Economics |
ISBN | 1464815453 |
The global economy has experienced four waves of rapid debt accumulation over the past 50 years. The first three debt waves ended with financial crises in many emerging market and developing economies. During the current wave, which started in 2010, the increase in debt in these economies has already been larger, faster, and broader-based than in the previous three waves. Current low interest rates mitigate some of the risks associated with high debt. However, emerging market and developing economies are also confronted by weak growth prospects, mounting vulnerabilities, and elevated global risks. A menu of policy options is available to reduce the likelihood that the current debt wave will end in crisis and, if crises do take place, will alleviate their impact.