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

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  • Marc Flandreau
  • Juan H. Flores
  • Norbert Gaillard
  • Sebastián Nieto-Parra

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 setup experienced a radical transformation in the recent period, and we 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 National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15128.

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Date of creation: Jul 2009
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Publication status: published as Marc Flandreau & Juan H. Flores & Norbert Gaillard & Sebasti�n Nieto‐Parra, 2010. "The End of Gatekeeping: Underwriters and the Quality of Sovereign Bond Markets, 1815–2007," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 6(1), pages 53 - 92.
Handle: RePEc:nbr:nberwo:15128

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Cited by:
  1. Flandreau, Marc & Gaillard, Norbert & Panizza, Ugo, 2010. "Conflicts of Interest, Reputation, and the Interwar Debt Crisis: Banksters or Bad Luck?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7705, C.E.P.R. Discussion Papers.
  2. Kim Oosterlinck & Loredana Ureche-Rangau & Jacques-Marie Vaslin, 2013. "Waterloo: a Godsend for French Public Finances?," Working Papers 0041, European Historical Economics Society (EHES).
  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," IHEID Working Papers, Economics Section, The Graduate Institute of International Studies 15-2010, Economics Section, The Graduate Institute of International Studies.
  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, Oxford University Press, vol. 29(4), pages 649-667, WINTER.
  5. Kim Oosterlinck, 2013. "Sovereign debt defaults: insights from history," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 29(4), pages 697-714, WINTER.
  6. 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, C.E.P.R. Discussion Papers 7915, C.E.P.R. Discussion Papers.
  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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