Abstract
Contract enforcement plays an important role in international lending. The hypotheses that better contract enforcement increases the level and lengthens the maturity of international debt are examined. Panel data are used for 83 developing and emerging market economies for the period 1982–1997 to examine these hypotheses. The empirical evidence supports these hypotheses.
Acknowledgements
I would like to thank Robert Feinberg, Shif Gurmu, and Neven Valev for useful comments on earlier versions of this paper. All errors are mine.
Notes
1 The countries are: Albania, Algeria, Angola, Argentina, Bangladesh, Bolivia, Botswana, Brazil, Bulgaria, Burkina Faso, Cameroon, Chile, China, Colombia, Congo, Costa Rica, Côte d'Ivoire, Czech Republic, Dominican Republic, Ecuador, Egypt, El Salvador, Ethiopia, Gabon, Gambia, Ghana, Guatemala, Guinea, Guinea-Bissau, Guyana, Haiti, Honduras, Hungary, India, Indonesia, Iran, Jamaica, Jordan, Kenya, Korea, Lebanon, Liberia, Madagascar, Malawi, Malaysia, Mali, Mexico, Morocco, Mozambique, Myanmar, Nicaragua, Niger, Nigeria, Oman, Pakistan, Panama, Papua New Guinea, Paraguay, Peru, Philippines, Poland, Romania, Russian Federation, Senegal, Sierra Leone, Somalia, South Africa, Sri Lanka, Sudan, Syria, Tanzania, Thailand, Togo, Trinidad and Tobago, Tunisia, Turkey, Uganda, Uruguay, Venezuela, Vietnam, Yemen, Zambia, and Zimbabwe.
2 In explaining the level of international debt, Eaton and Gersovtiz (1981) use the costs of default arising from embargoes on future lending as measured by the percent of exports variability and the ratio of imports to GNP, the level of income as measured by GNP, the growth rate of income as measured by the growth rate of GNP, population size, and the real level of debt to public institutions.
3 Explaining the maturity of international lending, Rodrick and Velasco (1999) use the degree of financial sophistication as measured by the ratio of M2 to GDP, the level of income as measured by the log of income per capita, the overall debt burden, as measured by the ratio of debt to GDP, corruption, and trade-related finance as measured by the ratio of imports to GDP.