Bonds or Loans? The Effect of Macroeconomic Fundamentals

54 Pages Posted: 15 Apr 2003

See all articles by Galina Hale

Galina Hale

University of California, Santa Cruz

Date Written: September 2005

Abstract

The costs of debt crises are not invariant to the foreign debt instrument composition: bank loans or bonds. The lending boom of the 1990s witnessed considerable variation over time and across countries in the debt instrument used by emerging market (EM) borrowers. This paper tests how macroeconomic fundamentals affect the composition of international debt instruments used by EM borrowers. Analysis of micro-level data using ordered probability model shows that macroeconomic fundamentals explain a significant share of variation in the ratio of bonds to loans for private borrowers, but not for the sovereigns.

Keywords: Emerging Markets, Foreign Debt, Debt Composition, Country Risk

JEL Classification: F34

Suggested Citation

Hale, Galina, Bonds or Loans? The Effect of Macroeconomic Fundamentals (September 2005). Yale ICF Working Paper No. 03-02; Cowles Foundation Discussion Paper No. 1403, Available at SSRN: https://ssrn.com/abstract=386080

Galina Hale (Contact Author)

University of California, Santa Cruz ( email )

1156 High St
Santa Cruz, CA 95064
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
797
Abstract Views
4,575
Rank
57,102
PlumX Metrics