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International debt: an explanation of the commercial banks' lending behavior after 1982

Armendariz de Aghion, B.; (1990) International debt: an explanation of the commercial banks' lending behavior after 1982. Journal of International Economics , 28 (1-2) pp. 173-186. 10.1016/0022-1996(90)90055-Q.

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Abstract

This paper shows that whenever banks negotiate sequentially with debtor countries for debt rescheduling, they have an incentive to establish a reputation as tough bargainers in early renegotiation rounds. Typically, the banks face a tradeoff between acquiring reputation for toughness but losing debt repayments, and rescheduling to maintain a positive probability of repayments. This tradeoff explains the empirical fact that only the major debtors have received new loans since 1982.

Type: Article
Title: International debt: an explanation of the commercial banks' lending behavior after 1982
DOI: 10.1016/0022-1996(90)90055-Q
Publisher version: http://dx.doi.org/10.1016/0022-1996(90)90055-Q
Language: English
UCL classification: UCL > School of Arts and Social Sciences > Faculty of Social and Historical Sciences > Economics
URI: http://discovery.ucl.ac.uk/id/eprint/15049
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