Why Did Belgium Pay Leopold's Bonds?

21 Pages Posted: 22 Oct 2019

See all articles by Kim Oosterlinck

Kim Oosterlinck

Université Libre de Bruxelles - SBS-EM, CEB

Joseph Blocher

Duke University School of Law

G. Mitu Gulati

Duke University School of Law

Date Written: October 11, 2019

Abstract

A body of empirical research in finance has attempted to assess whether stocks associated with sinful behavior (companies selling alcohol, tobacco, gambling activities, etc.) suffer from a market penalty. This question has been less studied in the sovereign bond market, but there is some research such finding similar penalties for some of the dodgier debts of sinful regimes such as the 1906 Tsarist bond issue and the 2017 Venezuelan Hunger Bond sale. In this article, we examine the presence of the sin penalty for the debts of one of the most odious of regimes ever: that of King Leopold II of the Congo Free State whose cruelty resulted in one of the first global human rights movements and his removal from power. The question is we ask is whether, once information as to the genocidal behavior of Leopold’s minions became widespread in the early 1900s, the market imposed a penalty on Leopold’s borrowings. We find no evidence of any market penalty on the debt that funded Leopold’s misdeed; even though there had been widespread condemnation of his behavior at the time. We ask: Why not?

Keywords: sin bonds, sovereign debt, odious debt, King Leopold, Congo Free State

JEL Classification: F34, F54, G15, K22

Suggested Citation

Oosterlinck, Kim and Blocher, Joseph and Gulati, Gaurang Mitu, Why Did Belgium Pay Leopold's Bonds? (October 11, 2019). Duke Law School Public Law & Legal Theory Series No. 2019-73. Available at SSRN: https://ssrn.com/abstract=3468518 or http://dx.doi.org/10.2139/ssrn.3468518

Kim Oosterlinck

Université Libre de Bruxelles - SBS-EM, CEB ( email )

50 Avenue Roosevelt, CP114/03
Brussels 1050
Belgium

Joseph Blocher

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

Gaurang Mitu Gulati (Contact Author)

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

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