Have Commercial Banks Ignored History?

29 Pages Posted: 10 Jan 2007

See all articles by Sule Ozler

Sule Ozler

University of California, Los Angeles (UCLA) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: January 1992

Abstract

This paper investigates the impact of past defaults. and of recently acquired sovereignty on the terms of bank loans for developing countries in the 1970s. We control for countries' repayment indicators and for a measure of their political stability. Our findings are that: 1) The repayment difficulties of the period prior to the 1930s do not have a statistically significant impact on the credit terms. In contrast. the defaults of the 1930s and the post war defaults and repayment difficulties do have a statistically significant impact on credit terms. These findings are in contrast to those studies that focused on crises periods in these markets. Our results suggest that countries' repayment behavior influence their later market access. 2) Nations that achieved sovereignty recently were charged higher rates than nations that were sovereign before the 1940s. In fact. recently sovereign borrowers were charged as high rates as the defaulters of the former episodes. This finding suggests that markets attach risk premium for new institutions.

Suggested Citation

Ozler, Sule, Have Commercial Banks Ignored History? (January 1992). NBER Working Paper No. w3959. Available at SSRN: https://ssrn.com/abstract=476128

Sule Ozler (Contact Author)

University of California, Los Angeles (UCLA) - Department of Economics ( email )

Box 951477
Bunche Hall 9361
Los Angeles, CA 90095-1477
United States
(310) 206-6031 (Phone)
(310) 825-9528 (Fax)

National Bureau of Economic Research (NBER)

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