Working Papers in Economics, Department of Economics, University of Bergen
Cathrin N. Fløgstad
Lending to developing countries: How do official creditors respond to sovereign defaults?
() and Ingvild Nordtveit
Abstract: How is lending to developing countries from bilateral and
multilateral creditors affected by sovereign defaults? The existing
empirical literature on reputational costs of defaults focuses on lending
from private creditors. Many developing countries, however, mostly rely on
grants and loans from official creditors as they are often excluded from
international capital markets. Using a panel dataset covering 118
developing countries in the period from 1972 to 2011, we estimate the
effect of sovereign defaults on disbursements of concessional and
non-concessional loans from official creditors. Following a default, we
find that concessional lending from bilateral and multilateral creditors is
reduced. For non-concessional lending, the results depend on the measure of
defaults and model specification. Thus, the reputational costs of default
are not only caused by exclusion from commercial capital markets but also
are present when looking at official lending.
Keywords: bilateral lending; multilateral lending; reputational costs of default; (follow links to similar papers)
JEL-Codes: F34; F35; H63; (follow links to similar papers)
52 pages, April 10, 2014
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
Questions (including download problems) about the papers in this series should be directed to Kjell Erik Lommerud ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design by Joachim Ekebom