Market Discipline
June 1, 1992
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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.
Subject: Banking, Debt default, Debt financing, Deposit insurance, External debt, Financial crises, Fiscal policy, Public debt
Keywords: Central and Eastern Europe, Debt default, Debt financing, Deposit insurance, exchange rate, financial market liberalization, market access, market discipline, market forces, market lender, market participant, market perception, markets discipline borrower, WP
Pages:
50
Volume:
1992
DOI:
Issue:
042
Series:
Working Paper No. 1992/042
Stock No:
WPIEA0421992
ISBN:
9781451846157
ISSN:
1018-5941
Notes
Also published in Staff Papers, Vol. 40, No. 1, March 1993.
