Do Collective Action Clauses Raise Borrowing Costs
Bibliographic Data
| ID | 9720505 |
|---|---|
| Authors | Barry Eichengreen (0000-0002-1683-4486, University of California, Berkeley), Ashoka Mody (International Monetary Fund) |
| Year | 2004 |
| Volume | 114 |
| Issue | 495 |
| Pages | 247-264 |
| Publication date | 2004-04-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Economic Journal (JOURNAL) |
| Journal identifiers | ISSN: 0013-0133 • E-ISSN: 1468-0297 |
| Publisher | Oxford University Press (OUP) (PUBLISHER) |
| DOI | 10.1111/j.1468-0297.2004.00208.x |
| OpenAlex | W1782122337 |
| Language | EN |
| Citations received | 4 |
| References cited | 8 |
We compare launch spreads on emerging-market bonds subject to UK governing law, which typically include collective action clauses, with spreads on bonds subject to US law, which do not. Collective-action clauses reduce the cost of borrowing for more creditworthy issuers, who appear to benefit from the ability to avail themselves of an orderly restructuring process. Less creditworthy issuers, in contrast, pay higher spreads. It appears that for less creditworthy borrowers the advantages of orderly restructuring are offset by the moral hazard and default risk associated with the presence of renegotiation-friendly loan provisions. We draw out the implications for the debate over whether to encourage the wider utilisation of these provisions as part of the effort to strengthen the international financial architecture. Copyright 2004 Royal Economic Society
Actuarial science · Bond · Business · Collective action · Default · Economics · Incentive · Issuer · Law and economics · Loan · Microeconomics · Monetary economics · Moral hazard · Political science · Restructuring · Banking stability, regulation, efficiency · Credit Risk and Financial Regulations · Finance · Global Financial Crisis and Policies · Law
| Unique citing works | 4 |
|---|---|
| Citations per year | 0,21 |
| Citation span | 2007 - 2021 (15) |
| Citation velocity | historical |
| Highly cited | No |
| Citation types | Neutral: 4 |