Structuring and Restructuring Sovereign Debt: The Role of a Bankruptcy Regime

August 1, 2007

Preview Citation

Format: Chicago

Patrick Bolton, and Olivier D Jeanne. Structuring and Restructuring Sovereign Debt: The Role of a Bankruptcy Regime, (USA: International Monetary Fund, 2007) accessed December 22, 2024

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

In an environment characterized by weak contractual enforcement, sovereign lenders can enhance the likelihood of repayment by making their claims more difficult to restructure ex post. We show however, that competition for repayment among lenders may result in a sovereign debt that is excessively difficult to restructure in equilibrium. This inefficiency may be alleviated by a suitably designed bankruptcy regime that facilitates debt restructuring.

Subject: Debt default, Debt restructuring, Financial crises, Public debt, Sovereign debt restructuring

Keywords: Debt structure, Short-term debt, WP

Publication Details

Pages:

27
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2007/192
Stock No:

WPIEA2007192
ISBN:

9781451867565
ISSN:

1018-5941

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