Market Discipline

Author/Editor:

Timothy D. Lane

Publication Date:

June 1, 1992

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Under what circumstances can market forces prevent unsustainable borrowing? Effective market discipline requires that capital markets be open, that; information on the borrower’s existing liabilities be readily available, that no bailout be anticipated, and that the borrower respond to market signals. This paper explores the implications of these conditions, and reviews some relevant empirical evidence.

Series:

Working Paper No. 1992/042

Subject:

Banking Debt default Debt financing Deposit insurance External debt Financial crises Fiscal policy Public debt

Notes:

Also published in Staff Papers, Vol. 40, No. 1, March 1993.

English

Publication Date:

June 1, 1992

ISBN/ISSN:

9781451846157/1018-5941

Stock No:

WPIEA0421992

Pages:

50

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