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Loan Pushing And Triadic Relations

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  • Ashwini Deshpande

    (Delhi School of Economics)

Abstract

This paper is an attempt to define and explore the phenomenon of loan pushing in international lending in the Seventies. The earliest descriptions of loan pushing are anecdotal; this paper surveys the various facets that emerge through this and suggests a possible definition that serves as the basis for the theoretical model in the next section. 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 maximising commercial bank could end up "pushing" loans on to the borrower. The changes in international commercial banking in the Seventies that facilitated this kind of loan pushing are discussed next. To the extent that the loan pushing doctrine is valid, it implies that the commercial banks are at least as responsible for the massive lending boom of the Seventies as the borrowers and thus ought to be made to bear the cost of adjustment as well.

Suggested Citation

  • Ashwini Deshpande, 1997. "Loan Pushing And Triadic Relations," Working papers 49, Centre for Development Economics, Delhi School of Economics.
    • Handle: RePEc:cde:cdewps:49
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