Debt Concentration and Secondary Markets Prices: A Theoretical and Empirical Analysis / Raquel Fernandez, Sule Ozler.

Format:

Book

Author/Creator:

Fernandez, Raquel.

Contributor:

National Bureau of Economic Research.

Ozler, Sule.

Series:

Working Paper Series (National Bureau of Economic Research) no. w3654.

NBER working paper series no. w3654

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Debt Concentration and Secondary Markets Prices

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1991.

Summary:

In the context of a model that distinguishes between large money center banks and smaller regional banks, we show that the percentage of a country's debt held by the large banks affects the secondary market price of that country's debt: the higher the concentration of the debt, the higher the secondary market price. We also show that the free trade of debt in the secondary market does not necessarily imply that the entire stock of debt will eventually be owned by the large banks. Our empirical analysis incorporates a number of potential determinants of secondary market prices. Among these are variables that are associated with a country's economic performance, variables that can be associated with the regulatory structure in the creditor's country, and the concentration of debt in the hands of the largest US banks. Our empirical findings indicate that concentration indeed has a positive effect on secondary market prices.

Notes:

Print version record

March 1991.