{
  "title": "Sovereign Default Risk and Private Sector Access to Capital in Emerging Markets",
  "publication": "IMF Working Papers, January 1, 2010",
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  "summary": "Top down spillovers of sovereign default risk can have serious consequences for the private sector in emerging markets. This paper analyzes the effects of these spillovers using firm-level data from 31 emerging market economies.",
  "sections": [
    {
      "heading": "Summary and main findings",
      "content": "- Top down spillovers of sovereign default risk can have serious consequences for the private sector in emerging markets.\n- The paper analyzes effects using firm-level data from 31 emerging market economies.\n- The study assesses how sovereign risk affects corporate access to international capital markets in the form of external credit (loans and bond issuances) and equity issuances.\n- Overall finding: sovereign default risk is a crucial determinant of private sector access to capital, whether external debt or equity.\n- Crisis resolution patterns matter: defaults towards private creditors have stronger adverse consequences than defaults to official creditors.\n- Time periods analyzed:\n  - Impact of sovereign debt crises during the 1980s and 1990s.\n  - The 1993 to 2007 period, using additional measures of sovereign risk—sovereign bond spreads and sovereign ratings—as explanatory variables."
    },
    {
      "heading": "Data, measures, and scope",
      "content": "- Firm-level data covering 31 emerging market economies.\n- Capital access outcomes considered:\n  - External credit: loans and bond issuances.\n  - Equity issuances.\n- Sovereign risk measures employed:\n  - Sovereign debt-crisis episodes (1980s and 1990s analysis).\n  - Sovereign bond spreads (1993 to 2007 analysis).\n  - Sovereign ratings (1993 to 2007 analysis)."
    },
    {
      "heading": "Policy implications and interpretation",
      "content": "- Sovereign default risk transmission to the private sector reduces firms’ ability to obtain external finance via both debt and equity channels.\n- The mode of crisis resolution influences private-sector outcomes; restructuring that imposes losses on private creditors is associated with stronger adverse effects on private access to capital than restructurings involving official creditors.\n- Implicit recommendation: managing sovereign risk and designing crisis-resolution frameworks that limit adverse spillovers to the private sector can help preserve private access to international capital markets.\n\n---\n\n Content in this bundle\n\n- wp1010\n  - wp1010 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp1010 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/sovereign-default-risk-and-private-sector-access-to-capital-in-emerging-markets-23510"
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    "Authors: Udaibir S Das, Michael G. Papaioannou, Christoph Trebesch",
    "Published: January 1, 2010",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451961942.001",
    "Top down spillovers of sovereign default risk can have serious consequences for the private sector in emerging markets.",
    "The paper analyzes effects using firm-level data from 31 emerging market economies.",
    "The study assesses how sovereign risk affects corporate access to international capital markets in the form of external credit (loans and bond issuances) and equity issuances.",
    "Overall finding: sovereign default risk is a crucial determinant of private sector access to capital, whether external debt or equity.",
    "Crisis resolution patterns matter: defaults towards private creditors have stronger adverse consequences than defaults to official creditors.",
    "Time periods analyzed:",
    "Firm-level data covering 31 emerging market economies.",
    "Capital access outcomes considered:",
    "Sovereign risk measures employed:",
    "Sovereign default risk transmission to the private sector reduces firms’ ability to obtain external finance via both debt and equity channels.",
    "The mode of crisis resolution influences private-sector outcomes; restructuring that imposes losses on private creditors is associated with stronger adverse effects on private access to capital than restructurings involving official creditors.",
    "Implicit recommendation: managing sovereign risk and designing crisis-resolution frameworks that limit adverse spillovers to the private sector can help preserve private access to international capital markets.",
    "**_wp1010**"
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