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Commercial Bank Provisioning against Claims on Developing Countries

  • Graham Bird

Abstract

Although this chapter focuses on ‘provisioning’ by commercial banks against their loans to developing countries, it is important to put this development into the general context of the evolving Third World debt problem. As is well catalogued in the literature, the seeds of this problem were, in many ways, sown following the first major hike in oil prices in 1973. Developing countries facing large balance of payments deficits were attracted to the alternative of financing which enabled them to adopt a slower speed of adjustment than would otherwise have been necessary. Even some oil-rich countries were encouraged to borrow on the strength of their oil resources. The required financing was, in large measure, provided through the intermediation of the private international banks with the official sector adopting a relatively muted role.1

Keywords

Secondary Market Market Valuation Debt Relief Debt Problem Debt Obligation 
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Notes

  1. 7.
    For a critical review of banks’ approaches to country risk analysis, see Graham Bird, ‘New Approaches to Country Risk’, Lloyds Bank Review, October 1986.Google Scholar
  2. 10.
    For a fuller analysis of the bargaining positions of creditors and debtors see Benjamin J. Cohen, ‘The Political Economy of LDC Debt’, mimeographed, August 1988.Google Scholar
  3. 18.
    For a concise presentation of this point of view see Martin Feldstein, ‘Muddling Through Can Be Just Fine’, The Economist, 27 June 1987.Google Scholar
  4. 19.
    For a review of some of these see Graham Bird, International Financial Policy and Economic Development: A Disaggregated Approach, Macmillan, London, 1987.CrossRefGoogle Scholar
  5. 21.
    See Benjamin J. Cohen, ‘Needed: An International Chapter 11’, mimeographed, June 1987.Google Scholar
  6. 22.
    For a more fully developed analysis of the scope for expanded co-financing see, Graham Bird, Developing Country Borrowing from Private Markets: Key Aspects and Prospects for the Future, Report for the External Debt Division of the World Bank, June 1985.Google Scholar
  7. 24.
    However, for a critical review of proposals to set up an Interest Rate Compensation Facility within the IMF, see Graham Bird, ‘Interest Rates and Debt: Would A Cap Fit?’ World Development, September, 1987.Google Scholar

Copyright information

© Graham Bird 1989

Authors and Affiliations

  • Graham Bird
    • 1
  1. 1.University of SurreyUK

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