Market Discipline
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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