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The End of Gatekeeping: Underwriters and the Quality of Sovereign Bond Markets, 1815-2007

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  • Flandreau, Marc
  • Flores Zendejas, Juan Huitzilihuitl
  • Gaillard, Norbert
  • Nieto-Parra, Sebastián

Abstract

We provide a comparison of salient organizational features of primary markets for foreign government debt over the very long run. We focus on output, quality control, information provision, competition, pricing, charging and signaling. We find that the market set up experienced a radical transformation in the recent period and interpret this as resulting from the rise of liability insurance provided by rating agencies. Underwriters have given up their former role as gatekeepers of liquidity and certification agencies to become aggressive competitors in a new speculative grade market.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7347.

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Date of creation: Jun 2009
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Handle: RePEc:cpr:ceprdp:7347

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Keywords: banks competition; certification; primary bond market; sovereign debt crises;

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References

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Citations

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Cited by:
  1. Kim Oosterlinck & Loredana Ureche-Rangau & Jacques-Marie Vaslin, 2013. "Waterloo: a Godsend for French Public Finances?," Working Papers CEB 13-028, ULB -- Universite Libre de Bruxelles.
  2. Flandreau, Marc & Flores Zendejas, Juan Huitzilihuitl, 2010. "Hamlet without the Prince of Denmark: Relationship banking and conditionality lending in the London market for government debt, 1815-1913," CEPR Discussion Papers 7915, C.E.P.R. Discussion Papers.
  3. Vincent Bignon & Marc Flandreau, 2010. "The Economics of Badmouthing: Libel Law and the Underworld of the Financial Press in France before World War I," EconomiX Working Papers 2010-18, University of Paris West - Nanterre la Défense, EconomiX.
  4. Rohan Pitchford & Mark L. J. Wright, 2013. "On the contribution of game theory to the study of sovereign debt and default," Oxford Review of Economic Policy, Oxford University Press, vol. 29(4), pages 649-667, WINTER.
  5. Marc Flandreau, Norbert Gaillard, Ugo Panizza, 2009. "Conflicts of Interest, Reputation and the Interwar Debt Crisis: Banksters or Bad Luck?," IHEID Working Papers 02-2010, Economics Section, The Graduate Institute of International Studies, revised Feb 2010.
  6. Kim Oosterlinck, 2013. "Sovereign debt defaults: insights from history," Oxford Review of Economic Policy, Oxford University Press, vol. 29(4), pages 697-714, WINTER.
  7. Marc Flandreau & Juan Flores, 2011. "Bondholders vs. bond-sellers? Investment banks and conditionality lending in the London market for foreign government debt, 1815-1913," Working Papers 0002, European Historical Economics Society (EHES).

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