U.S. Commercial Banks and the Developing Country Debt Crisis

By Jeffrey Sachs, Harry Huizinga

NBER Working Paper No. 2455

Issued in December 1987

NBER Program(s):International Trade and Investment, International Finance and Macroeconomics

The major theme of this paper is that the commercial banks have weathered the debt crisis, while many debtor countries remain in economic paralysis or worse. There is a growing consensus that much of the LDC debt will not be fully serviced in the future, and that consensus is reflected in at least two ways: in the discounts observed in the secondary market prices for LDC debt, and in the discounts in the stock market pricing of banks with exposure in the LDCs.

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https://www.nber.org/papers/w2455

Published: Sachs, Jeffrey and Harry Huizinga. "U.S. Commercial Banks and the Developing-Country Debt Crisis." Brookings Papers on Economic Activity, 1987:2, pp. 555-606.