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The evolution of credit terms : an empirical study of commercial bank lending to developing countries

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  • Ozler, Sule

Abstract

This paper studies changes in spreads on bank loans to developing countries during 1968-81. It found that a borrower's experience had a significant impact on spreads. Spreads started at high values at low levels of loan experience and decreased as experience increased. Spreads at initial-experience levels were about 30 percent above benchmark, with experience. The impact of experience became negligible with 30 prior loans. The paper also suggests that a greater role for international organizations in collecting and disseminating information about potential borrowers. Indeed, international institutions have been doing more of this fact-finding since the onset of the debt crisis.

Suggested Citation

  • Ozler, Sule, 1990. "The evolution of credit terms : an empirical study of commercial bank lending to developing countries," Policy Research Working Paper Series 355, The World Bank.
    • Handle: RePEc:wbk:wbrwps:355
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    References listed on IDEAS

    as
    1. Eaton, Jonathan & Taylor, Lance, 1986. "Developing country finance and debt," Journal of Development Economics, Elsevier, vol. 22(1), pages 209-265, June.
    2. Jonathan Eaton & Mark Gersovitz, 1981. "Debt with Potential Repudiation: Theoretical and Empirical Analysis," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 48(2), pages 289-309.
    3. Diamond, Douglas W, 1989. "Reputation Acquisition in Debt Markets," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 828-862, August.
    4. Donogh C. McDonald, 1982. "Debt Capacity and Developing Country Borrowing: A Survey of the Literature (Capacité d'endettement et emprunts des pays en développement: aperçu des études consacrées à cette question) (Capacidad," IMF Staff Papers, Palgrave Macmillan, vol. 29(4), pages 603-646, December.
    5. Feder, Gershon & Just, Richard E., 1977. "A study of debt servicing capacity applying logit analysis," Journal of Development Economics, Elsevier, vol. 4(1), pages 25-38, February.
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    Cited by:

    1. Khaled Amira & Mark L. Muzere, 2018. "Collateral and Yield Spread of Syndicated Loans," Accounting and Finance Research, Sciedu Press, vol. 7(3), pages 180-180, August.

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