Financial crises, moral hazard and the "speciality" of the international interbank market: further evidence from the pricing of syndicated bank loans to emerging markets
We analyse the evolution of emerging market loan spreads at a more disaggregated level than other current studies, providing statistical support to the assumption of the "speciality" of the international interbank market, to the extent that the pricing of interbank credit is insensitive to the nature (public or private) of the borrower. In sharp contrast, the public or private nature of other borrowers, such as corporates or financial firms, causes significant differences in spreads. These results could be interpreted as evidence of the possible role played by implicit government guarantees in the international interbank market, which lower the incentives for participants to monitor counterpart risk very closely. Furthermore, the specificity of banks is witnessed by the fact that only spreads on loans to emerging market banks clearly declined following the 1995 Mexican bailout, whereas evidence on the pricing of lending to corporates and financial firms is more ambiguous. Although, on the one hand, this might support the view that financial assistance from the IMF gives rise to moral hazard, on the other hand, contrary to expectations, spreads on loans to Asian banks, the major candidates in the current policy debate on moral hazard, have been unaffected by the IMF's response to Mexico's crisis.
|Date of creation:||Mar 2002|
|Contact details of provider:|| Postal: Via Nazionale, 91 - 00184 Roma|
Web page: http://www.bancaditalia.it
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:bdi:wptemi:td_438_02. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.