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Delays in Sovereign Debt Restructurings. Should we really blame the creditors?

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  • Trebesch, Christoph

Abstract

Disorderly debt restructurings can be detrimental for debtor countries and creditors alike. This paper investigates delays in sovereign debt restructurings using a comprehensive new dataset since 1980. Why are some debt crises settled in just a few months, while others take many years? Have creditor coordination problems become more cumbersome in recent years? To answer these and other questions, the study provides ample case study evidence. Moreover, I apply semi-parametric duration models. The results indicate that holdouts, inter-creditor disputes and litigation explain some of the observed restructuring delays. However, government behaviour and political instability appear far more important in explaining lengthy restructurings. The volume of IMF credits has no systematic influence on the speed of crisis resolution.

Suggested Citation

  • Trebesch, Christoph, 2008. "Delays in Sovereign Debt Restructurings. Should we really blame the creditors?," Proceedings of the German Development Economics Conference, Zurich 2008 44, Verein für Socialpolitik, Research Committee Development Economics.
    • Handle: RePEc:zbw:gdec08:44
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    Cited by:

    1. Rohan Pitchford & Mark L. J. Wright, 2012. "Holdouts in Sovereign Debt Restructuring: A Theory of Negotiation in a Weak Contractual Environment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(2), pages 812-837.
    2. Das, Udaibir S. & Papaioannou, Michael G. & Trebesch, Christoph, . "Sovereign Default Risk and Private Sector Access to Capital in Emerging Markets," Chapters in Economics,, University of Munich, Department of Economics.
    3. Luca Agnello & Vítor Castro & Ricardo M. Sousa, 2018. "The Legacy and the Tyranny of Time: Exit and Re‐Entry of Sovereigns to International Capital Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 50(8), pages 1969-1994, December.
    4. Elard, Ilaf, 2020. "Three-player sovereign debt negotiations," International Economics, Elsevier, vol. 164(C), pages 217-240.
    5. Klapper, Leora & Richmond, Christine, 2011. "Patterns of business creation, survival and growth: Evidence from Africa," Labour Economics, Elsevier, vol. 18(S1), pages 32-44.
    6. Juan Flores Zendejas & Pierre Pénet & Christian Suter, 2021. "The Revenge of Defaulters. Sovereign Defaults and Interstate Negotiations in the Post-War Financial Order, 1940–65," Post-Print hal-03352783, HAL.
    7. Ran Bi & Marcos Chamon & Jeromin Zettelmeyer, 2016. "The Problem that Wasn’t: Coordination Failures in Sovereign Debt Restructurings," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 64(3), pages 471-501, August.
    8. Ugo Panizza & Federico Sturzenegger & Jeromin Zettelmeyer, 2010. "International Government Debt," UNCTAD Discussion Papers 199, United Nations Conference on Trade and Development.
    9. Antonina Ivanova Boncheva, 2022. "Finance for Climate Action: Postcovid-19 Recovery Challenges," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 17(2), pages 1-20, Abril - J.
    10. David Benjamin & Mark L. J. Wright, 2009. "Recovery before redemption: A theory of delays in sovereign debt renegotiations," CAMA Working Papers 2009-15, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    11. Victor Leão Borges de Almeida & Carlos Esquivel & Juan Pablo Nicolini & Timothy Kehoe, 2018. "Did the 1980s in Latin America Need to Be a Lost Decade?," 2018 Meeting Papers 829, Society for Economic Dynamics.
    12. Lorenzo Bini Smaghi, 2013. "Sovereign Risk," Chapters, in: Andreas Dombret & Otto Lucius (ed.), Stability of the Financial System, chapter 10, Edward Elgar Publishing.
    13. Luo, Jie & Wang, Cheng, 2018. "Optimal sovereign lending and default," Journal of International Economics, Elsevier, vol. 111(C), pages 190-213.
    14. Christoph Trebesch, 2009. "The Cost of Aggressive Sovereign Debt Policies: How Much is theprivate Sector Affected?," IMF Working Papers 2009/029, International Monetary Fund.

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    More about this item

    Keywords

    Debt Crises; Debt Restructuring; Duration Models;
    All these keywords.

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

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