Is debt relief efficient?
By: Serkan Arslanalp, Peter Blair Henry.
Contributors: Henry, Peter Blair.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10217; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10217.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Debt relief.; Stocks -- Prices.
Description: "When Less Developed Countries (LDCs) announce debt relief agreements under the Brady Plan, their stock markets appreciate by an average of 60 percent in real dollar terms a $42 billion increase in shareholder value.  In contrast, there is no significant stock market increase for a control group of LDCs that do not sign Brady agreements.  The results persist after controlling for IMF programs, trade liberalizations, capital account liberalizations, and privatization programs.  The stock market appreciations successfully forecast higher future net resource transfers, investment and growth.  Creditors also benefit from the Brady Plan.  Controlling for other factors, stock prices of US commercial banks with significant LDC loan exposure rise by 35 percent a $13 billion increase in shareholder value.  The results suggest that debt relief can generate large efficiency gains when the borrower suffers from debt overhang"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
Title from PDF file as viewed on 1/18/2005.
Also available in print.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.