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Loan Pushing and Triadic Relations

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  • Ashwini Deshpande

Abstract

This 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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  • Ashwini Deshpande, 1999. "Loan Pushing and Triadic Relations," Southern Economic Journal, John Wiley & Sons, vol. 65(4), pages 914-926, April.
    • Handle: RePEc:wly:soecon:v:65:y:1999:i:4:p:914-926
    DOI: 10.1002/j.2325-8012.1999.tb00208.x
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    1. Arvind K Jain, 1986. "International Lending Patterns of U.S. Commercial Banks," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 17(3), pages 73-88, September.
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    3. Paul Davidson & Jan A. Kregel (ed.), 1991. "Economic PROBLEMS OF THE 1990s," Books, Edward Elgar Publishing, number 123.
    4. Douglas W. Diamond, 1984. "Financial Intermediation and Delegated Monitoring," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 51(3), pages 393-414.
    5. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
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    7. Kaushik Basut & Ashwini Deshpande, 1995. "The Strategic Role Of International Credit As An Instrument Of Trade," The Japanese Economic Review, Japanese Economic Association, vol. 46(4), pages 333-350, December.
    8. Santomero, Anthony M, 1984. "Modeling the Banking Firm: A Survey," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 16(4), pages 576-602, November.
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    Cited by:

    1. Kaushik Basu, 2007. "Coercion, contract and the limits of the market," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 29(4), pages 559-579, December.

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