Would Collective Action Clauses Raise Borrowing Costs? An Update and Additional Results
AbstractThis paper updates earlier findings concerning the impact of collective-action clauses on borrowing costs. It has been argued that only in recent quarters have investors focused on the presence of these provisions, and that, given the international financial institutions' newfound resolve to "bail in" investors, they now regard these clauses with trepidation. Extending our data to 1999, we find no evidence of such changes but, rather, the same pattern as before: collective-action clauses raise costs of borrowing for low-rated issuers but reduce them for issuers with high credit ratings. We drop a special case -- Israel - - and show that this has no impact on the results. And we show that the same results hold for sovereign borrowers alone. We argue that these results should reassure those who regard collective action clauses as an important element in the campaign to strengthen the international financial architecture.
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Bibliographic InfoPaper provided by EconWPA in its series International Finance with number 0012003.
Length: 20 pages
Date of creation: 09 Feb 2001
Date of revision:
Note: 20 pages, Acrobat .pdf
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Other versions of this item:
- Eichengreen, Barry & Mody, Ashoka, 2000. "Would collective action clauses raise borrowing costs? - an update and additional results," Policy Research Working Paper Series 2363, The World Bank.
- Eichengreen, Barry & Mody, Ashoka, 2000. "Would Collective Action Clauses Raise Borrowing Costs? An Update and Additional Results," Center for International and Development Economics Research, Working Paper Series qt46p4z4c4, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
- F3 - International Economics - - International Finance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-02-27 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Eichengreen, Barry & Mody, Ashoka, 1999.
"Would Collective Action Clauses Raise Borrowing Costs?,"
CEPR Discussion Papers
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35332, University Library of Munich, Germany.
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