Publication Date: February 2003
Revision Date: September 2005
Pages: 53pp, abstract
The costs of debt crises are not invariant to the foreign debt instrument composition: bank loans or bonds. The lending boom of the 1990s witnessed considerable variation over time and across countries in the debt instrument used by emerging market (EM) borrowers. This paper tests how macroeconomic fundamentals aﬀect the composition of international debt instruments used by EM borrowers. Analysis of micro-level data using ordered probability model shows that macroeconomic fundamentals explain a signiﬁcant share of variation in the ratio of bonds to loans for private borrowers, but not for the sovereigns.
Emerging markets, Foreign debt, Debt composition, Country risk
JEL Classification Codes: F34