Developing Country Debt and the Market Value of Large Commercial Banks
- Developing Country Debt and the Market Value of Large Commercial Banks
- Kyle, Steven C.
Sachs, Jeffrey D.
- Working papers
- Earth Institute
International and Public Affairs
Health Policy and Management
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- Part Number:
- National Bureau of Economic Research
- Publisher Location:
- Cambridge, Mass.
- The effect on commercial banks of exposure to large amounts of developing country debt has been a topic of increasing concern in recent years. Fear of default on the part of the debtor countries has led to fears for the solvency of the creditor banks since in many cases the total of outstanding exposure to risky debtors exceeds the entire capital base of the banks involved. The paper presents a first effort towards measuring the effects of LDC debt exposure on the market value of large commercial value banks in the United States. Our results indicate that exposure to developing country debt has exerted a measurable and significant negative effect on the ratio of market to book value for these banks.
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- Suggested Citation:
- Steven C. Kyle, Jeffrey D. Sachs, 1984, Developing Country Debt and the Market Value of Large Commercial Banks, Columbia University Academic Commons, http://hdl.handle.net/10022/AC:P:8231.