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Sovereign Borrowing by Developing Countries: What Determines Market Access?

  • R. Gaston Gelos, Ratna Sahay and Guido Sandleris

What determines the ability of governments from developing countries to access international credit markets? We examine this question using detailed data on sovereign bond issuances and public syndicated bank loans between 1980 and 2000. A key finding of this paper is that the frequency of default does not reduce market access and there appears to be no lengthy exclusion from credit markets following a default. We also find that trade openness, a standard measure of a country's links with the rest of the world, and traditional liquidity and macroeconomic indicators do not help much in explaining market access. However, a country's vulnerability to shocks and the perceived quality of economic policies and institutions appear to influence the government’s ability to tap the markets.

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Paper provided by Universidad Torcuato Di Tella in its series Business School Working Papers with number 2008-02.

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Length: 33 pages
Date of creation: 2008
Handle: RePEc:udt:wpbsdt:2008-02
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