Hamlet Without The Prince of Denmark: Relationship Banking and Conditionality Lending In The London Market For Foreign Government Debt, 1815 - 1913
This paper offers a theory of conditionality lending in 19th century international capital markets. We argue that ownership of reputation signals by prestigious banks rendered them able and willing to monitor government borrowing. Monitoring was a source of rent, and it led bankers to support countries facing liquidity crises in a manner similar to modern descriptions of “relationship” lending to corporate clients by “parent” banks. Prestigious bankers’ ability to implement conditionality loans and monitor countries’ financial policies also enabled them to deal with solvency. We find that, compared with prestigious bankers, bondholders’ committees had neither the tools nor the prestige required for effectively dealing with defaulters. Hence such committees were far less important than previous research has claimed.
|Date of creation:||Jun 2010|
|Contact details of provider:|| Postal: P.O. Box 36, 1211 Geneva 21|
Phone: ++41 22 731 17 30
Fax: ++41 22 738 43 06
Web page: http://www.graduateinstitute.ch/economics
More information through EDIRC
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.:
- Peter H. Lindert & Peter J. Morton, 1989.
"How Sovereign Debt Has Worked,"
NBER Chapters,in: Developing Country Debt and Economic Performance, Volume 1: The International Financial System, pages 39-106
National Bureau of Economic Research, Inc.
- Peter H. Lindert & Peter J. Morton, 1989. "How Sovereign Debt Has Worked," NBER Chapters,in: Developing Country Debt and the World Economy, pages 225-236 National Bureau of Economic Research, Inc.
- Namsuk Kim & John Joseph Wallis, 2003. "The Market for American State Government Bonds in Britain and the United States, 1830-1843," NBER Working Papers 10108, National Bureau of Economic Research, Inc.
- MARCELO de PAIVA ABREU, 2006. "Brazil as a debtor, 1824-1931 -super-1," Economic History Review, Economic History Society, vol. 59(4), pages 765-787, November.
- Hoshi, Takeo & Kashyap, Anil & Scharfstein, David, 1990. "The role of banks in reducing the costs of financial distress in Japan," Journal of Financial Economics, Elsevier, vol. 27(1), pages 67-88, September.
- Takeo Hoshi & Anil Kashyap & David Scharfstein, 1990. "The Role of Banks in Reducing the Costs of Financial Distress in Japan," NBER Working Papers 3435, National Bureau of Economic Research, Inc.
- Barry Eichengreen & Kenneth Kletzer & Ashoka Mody, 2003. "Crisis resolution: next steps," Pacific Basin Working Paper Series 03-05, Federal Reserve Bank of San Francisco.
- Eichengreen, Barry & Kletzer, Kenneth & Mody, Ashoka, 2003. "Crisis Resolution: Next Steps," Santa Cruz Department of Economics, Working Paper Series qt4cj974r4, Department of Economics, UC Santa Cruz.
- Kenneth Kletzer & Barry J. Eichengreen & Ashoka Mody, 2003. "Crisis Resolution; Next Steps," IMF Working Papers 03/196, International Monetary Fund.
- Eichengreen, Barry & Kletzer, Kenneth & Mody, Ashoka, 2003. "Crisis Resolution: Next Steps," Santa Cruz Center for International Economics, Working Paper Series qt4cj974r4, Center for International Economics, UC Santa Cruz.
- Barry Eichengreen & Kenneth Kletzer, 2003. "Crisis Resolution: Next Steps," NBER Working Papers 10095, National Bureau of Economic Research, Inc.
- Rui Pedro Esteves, 2007. "Quis custodiet quem? Sovereign Debt and Bondholders` Protection Before 1914," Economics Series Working Papers 323, University of Oxford, Department of Economics.
- Barry Eichengreen and Richard Portes., 1988. "Settling Defaults in the Era of Bond Finance," Economics Working Papers 8885, University of California at Berkeley.
- Eichengreen, Barry & Portes, Richard, 1988. "Settling Defaults in the Era of Bond Finance," CEPR Discussion Papers 272, C.E.P.R. Discussion Papers.
- Eichengreen, Barry & Portes, Richard, 1988. "Settling Defaults in the Era of Bond Finance," Department of Economics, Working Paper Series qt1x20r17d, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Erik Lehmann & Neuberger, Doris, 2000. "Do Lending Relationships Matter? Evidence from Bank Survey Data in Germany," CoFE Discussion Paper 00-04, Center of Finance and Econometrics, University of Konstanz.
- Olivier Accominotti & Marc Flandreau & Riad Rezzik, 2011. "The spread of empire: Clio and the measurement of colonial borrowing costs," Economic History Review, Economic History Society, vol. 64(2), pages 385-407, 05.
- Sharpe, Steven A, 1990. " Asymmetric Information, Bank Lending, and Implicit Contracts: A Stylized Model of Customer Relationships," Journal of Finance, American Finance Association, vol. 45(4), pages 1069-1087, September.
- Steven A. Sharpe, 1989. "Asymmetric information, bank lending, and implicit contracts: a stylized model of customer relationships," Finance and Economics Discussion Series 70, Board of Governors of the Federal Reserve System (U.S.).
- Flores, Juan-Huitzi & Flandreau, Marc, 2007. "Bonds and Brands : intermediaries and reputation in sovereign debt markets 1820-1830," IFCS - Working Papers in Economic History.WH wp07-12, Universidad Carlos III de Madrid. Instituto Figuerola. Full references (including those not matched with items on IDEAS)