TY  - JOUR
AU  - Hermalin, Benjamin E
AU  - Rose, Andrew K
TI  - Risks to Lenders and Borrowers in International Capital Markets
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6886
PY  - 1999
Y2  - January 1999
DO  - 10.3386/w6886
UR  - http://www.nber.org/papers/w6886
L1  - http://www.nber.org/papers/w6886.pdf
N1  - Author contact info:
Benjamin Hermalin
University of California, Berkeley
200 California Hall, #1500
Berkeley, CA 94720-1500
E-Mail: hermalin@berkeley.edu

Andrew K. Rose
Business School
National University of Singapore
15 Kent Ridge Drive
Singapore 119245
Tel: +65 6516-3075
Fax: +65 6779-1365
E-Mail: bizdean@nus.edu.sg
M1  - published as Benjamin Hermalin, Andrew K. Rose, Peter M. Garber, Andrew Crockett, David W. Mullins, Jr. "Risks to Lenders and Borrowers in International Capital Markets," in Martin Feldstein, editor, "International Capital Flows" University of Chicago Press (1999)

AB  - This paper provides a framework for understanding the risks to borrowers and lenders in capital markets.  We begin with a description of a capital markets in a domestic context.  This allows us to focus on two key imperfections which lie at the heart of all financial systems: imperfect information, and the difficulty of making credible commitments for repayment.  In the international context, these problems tend to be exacerbated. There are also two sources of risk in international borrowing that are absent in a purely domestic context: the risk that sovereign borrowers will default, and the risk of macroeconomic instability that stems from the impact of net capital flows on the monetary system.
ER  -