Work

Like Father Like Sons? The Cost of Sovereign Defaults in Reduced Credit to the Private Sector

Year: 2016

Type: article

Abstract: We investigate the impact of sovereign defaults on the ability of the corporate sector in emerging nations to finance itself abroad. We test the hypothesis that sovereign defaults have a negative spillover onto the private sector through credit rationing. We explore a novel data set covering the majority of corporates in emerging nations that received foreign capital between 1880 and 1913. Results confirm that credit rationing existed, was very large, and persisted long beyond the default settlement. The private sector paid a severe cost for their governments’ debt intolerance, with negative implications for their growth.

Source: Journal of money credit and banking

DOI: 10.1111/jmcb.12341

Authors: RUI ESTEVES, JOÃO TOVAR JALLES

Institutions: University of Oxford, Organisation de Coopération et de Développement Economiques

Language: English

Topic: Global Financial Crisis and Policies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: bronze

OpenAlex ID: W123376444

FWCI: 2.231

Cites: 67

Cited by: 21

Related to: 10