Bank Loans Versus Bond Finance : Implications for Sovereign Debtors  

Oleh:

Tanaka, Misa

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Economic Journal (EBSCO) vol. 116 no. 510 (2006), page C149-C171.
Topik: BANK LOANS; bank loans; bond finance; sovereign debtors
Fulltext: C149.pdf (192.89KB)

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: EE28.21 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

This article analyses the optimal choice between bank loans and bond finance for a sovereign debtor. It shows that if borrowers can be 'publicly monitored' by a rating agency that disseminates the information about their creditworthiness, their choice between bank loans and bond finance is determined by the trade - off between two deadweight costs : the crisis cost of default and the cost of debtor moral hazard. If crisis costs are large, sovereigns use bank loans for short - term financing and bond issuance for long - term financing. I also demonstrate that state contingent debt and IMF intervention can improve welfare.

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