Contesting the preferred creditor status of the League of Nations, 1931-3

Bibliographic Data

ID3379893
AuthorsJuan Flores Zendejas (0000-0003-2800-7258, Universitas Flores, corresponding author)
Year2021
Volume74
Issue4
Pages1062-1086
Publication date2021-11-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueThe Economic History Review (JOURNAL)
Journal identifiersISSN: 0013-0117 • E-ISSN: 1468-0289
PublisherWiley (PUBLISHER • GB)
DOI10.1111/ehr.13071
OpenAlexW3165604840
LanguageEN
References cited30

This article analyses the defaults of the League loans, which were private loans promoted by the League of Nations to support governments in central and eastern Europe in the 1920s. Previous works have argued that governments refused to grant these loans preferred status. However, this article shows that at the onset of the crisis, investors and governments treated these loans differently. It provides an empirical analysis to test whether there was a common element in the pricing of these loans and whether they enjoyed seniority compared to other, non-League loans. The findings show that there was a common factor driving the bond prices of these loans at the onset of the 1931 banking crisis. This article demonstrates that while these loans were not legally senior, certain governments granted the League loansde factopreferred status under the assumption that averting default would foster renewed support from the League. Archival evidence is provided to show that governments ceased to grant the League loans exceptional treatment when the expected support from the League did not materialize, which further weakened the ability of the League to secure emergency lending

Bond · Business · Creditor · De facto · Debt · Default · Economics · Financial system · League · Loan · Political science · Seniority · Finance · Global Financial Crisis and Policies · Law · State Capitalism and Financial Governance

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