Loan Pushing and Triadic Relations
AbstractThis paper is an attempt to define and explore the phenomenon of loan pushing in international lending in the 1970s. The earliest descriptions of loan pushing are anecdotal; this paper surveys the various facets that emerge from these anecdotes and suggests a possible definition that serves as the basis for a theoretical model. This model, inspired by the confessions of a banker, explores a triadic relationship between a corporation in the lender country, the lender bank, and a borrower in a developing country and suggests that a rational, profit maximizing commercial bank could end up pushing loans on to the borrower. Changes in international commercial banking in the 1970s that facilitated this type of loan pushing are discussed next. To the extent that the loan pushing doctrine is valid, it implies that the commercial banks were at least as responsible for the massive lending boom of the 1970s as the borrowers and should have been made to bear the cost of adjustment as well.
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Bibliographic InfoArticle provided by Southern Economic Association in its journal Southern Economic Journal.
Volume (Year): 65 (1999)
Issue (Month): 4 (April)
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- Basu, Kaushik, 2006.
"Coercion, Contract and the Limits of the Market,"
06-01, Cornell University, Center for Analytic Economics.
- Basu, Kaushik & Morita, Hodaka, 2006.
"International credit and welfare: A paradoxical theorem and its policy implications,"
European Economic Review,
Elsevier, vol. 50(6), pages 1507-1528, August.
- Basu, Kaushik & Morita, Hodaka, 2005. "International Credit and Welfare: A Paradoxical Theorem and Its Policy Implications," Working Papers 05-04, Cornell University, Center for Analytic Economics.
- Basu, Kaushik & Morita, Hodaka, 2001. "International Credit and Welfare: Some Paradoxical Results with Implications for the Organization of International Lending," Working Papers 01-05, Cornell University, Center for Analytic Economics.
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