Do the Secondary Markets Believe in Life after Debt?

41 Pages Posted: 20 Apr 2016

Date Written: August 31, 1989

Abstract

Using panel data econometric techniques to examine the case for external debt relief, this report explores the relations between measures of creditworthiness and debt discounts on the secondary markets. It finds, however, that secondary market values tend to reflect past difficulties, not anticipate future ones - so they can' t be used to build a case for debt relief. The secondary markets, still in an early evolutionary stage, are quite "thin" and thus unable to exploit efficiently and quickly all available information on creditworthiness.

Keywords: Strategic Debt Management, Financial Intermediation, Environmental Economics & Policies, Economic Theory & Research, Banks & Banking Reform

Suggested Citation

Kathuria, Sanjay and Bhardwaj, Anjali, Do the Secondary Markets Believe in Life after Debt? (August 31, 1989). World Bank Policy Research Working Paper No. 252, Available at SSRN: https://ssrn.com/abstract=569203

Sanjay Kathuria (Contact Author)

World Bank- South Asia region ( email )

1818 H Street NW
Washington, DC 20433
United States

Anjali Bhardwaj

Consultant ( email )

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