Multilateral Debt Relief through the Eyes of Financial Markets
The economic benefits of debt relief for recipient countries have been the subject of arduous debate, at least partly motivated by the difficulty of identifying the causal effect of debt relief on economic performance-given that performance itself...
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| Format: | Policy Research Working Paper |
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2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090323094828 http://hdl.handle.net/10986/4067 |
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okr-10986-40672021-04-23T14:02:15Z Multilateral Debt Relief through the Eyes of Financial Markets Raddatz, Claudio ACCOUNTING AFFILIATES ASSETS BASIS POINTS BILATERAL CREDITORS BUSINESS TAXES BUYBACK CAPITAL FORMATION CHECKS COLLECT DEBT COMMERCIAL CREDITORS COMMERCIAL LOANS COMMODITIES CONSUMER CONSUMER GOODS CORPORATE GOVERNANCE CREDITOR CREDITOR RIGHTS CREDITORS CURRENT DEBT DEBT DEBT ACCUMULATION DEBT BURDEN DEBT BURDENS DEBT FORGIVENESS DEBT LEVELS DEBT OBLIGATIONS DEBT OVERHANG DEBT PROBLEMS DEBT REDUCTION DEBT RELIEF DEBT RELIEF INITIATIVE DEBT RELIEF INITIATIVES DEBT RELIEF PACKAGE DEBT SERVICE DEBT STOCK DEBT STOCK REDUCTIONS DEBT SUSTAINABILITY DEBT SUSTAINABILITY ANALYSIS DEBTOR DEBTOR COUNTRIES DEBTS DEPENDENT DEVELOPING COUNTRIES DEVELOPMENT BANK DIVIDEND DUMMY VARIABLE EARNINGS ECONOMIC COSTS EFFECT OF DEBT EMERGING MARKETS EMERGING STOCK MARKET EMERGING STOCK MARKETS EMPLOYMENT EQUIPMENT EXCESSIVE DEBT EXPENDITURE EXPROPRIATION FINANCIAL MARKETS FINANCIAL SERVICES FINANCIAL SUPPORT FOREIGN CREDITORS GLOBAL MARKETS GOVERNMENT REVENUE HOLDINGS HOST COUNTRY HUMAN CAPITAL ILLIQUIDITY IMPACT OF DEBT IMPLICIT TAX INCOME INCOME TAXES INDEBTED INDEBTED POOR COUNTRIES INFORMATION TECHNOLOGY INTEREST RATES INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL DEVELOPMENT INTERNATIONAL FINANCE INVESTMENT CORPORATION INVESTMENT OPPORTUNITIES INVESTMENT PROJECTS LEVELS OF DEBT LIFE ASSURANCE LOCAL GOVERNMENTS LOW INCOME LOW- INCOME LOW-INCOME LYON MACROECONOMIC CONDITIONS MACROECONOMIC PERFORMANCE MACROECONOMICS MAJOR DEBT MARKET CAPITALIZATION MARKET RETURN MARKET TURNOVER MASSIVE DEBT MONETARY FUND MULTILATERAL DEBT MULTILATERAL DEBT RELIEF OPEN ECONOMIES PAR VALUE PARENT COMPANIES PARENT COMPANY POLITICAL ECONOMY PORTFOLIO PRESS COVERAGE PRIVATE CREDIT PRIVATE INVESTMENT PROBABILITY PUBLIC DEBT PUBLIC EXPENDITURE PUBLIC GOODS REAL EXCHANGE RATE RECIPIENT COUNTRIES REGIONAL DEVELOPMENT BANKS RENTS REPAYMENT RESEARCH ASSISTANCE RETURN RETURNS SALES SECURITIES SENIOR SHARE PRICES SOVEREIGN DEBT STOCK EXCHANGE STOCK MARKETS STOCK OF DEBT STOCK RETURN STOCK RETURNS STOCKS SUBSIDIARIES SUBSIDIARY SUBSTANTIAL DEBT SUBSTANTIAL DEBT RELIEF TAXATION TRADING TYPE OF DEBT VALUABLE VALUATION VALUE OF DEBT WORLD MARKETS WORTH The economic benefits of debt relief for recipient countries have been the subject of arduous debate, at least partly motivated by the difficulty of identifying the causal effect of debt relief on economic performance-given that performance itself may drive the decision to grant relief. This paper conducts an event study to assess the economic consequences of multilateral debt relief for recipient countries that is robust to these reverse causality issues. It estimates the response of the stock prices of South African multinationals with subsidiaries in those countries to the announcement of debt relief initiatives, and shows that stock prices exhibit a significant increase above those of other firms, especially around the launching of the recent Multilateral Debt Relief Initiative. The improvement in financial markets' assessment of the value of these multinationals is consistent with lower expected levels of future taxation in the recipient countries. Overall, the results are consistent with the "debt overhang" argument for debt relief. 2012-03-19T19:09:25Z 2012-03-19T19:09:25Z 2009-03-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090323094828 http://hdl.handle.net/10986/4067 English Policy Research working paper ; no. WPS 4872 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper The World Region The World Region |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ACCOUNTING AFFILIATES ASSETS BASIS POINTS BILATERAL CREDITORS BUSINESS TAXES BUYBACK CAPITAL FORMATION CHECKS COLLECT DEBT COMMERCIAL CREDITORS COMMERCIAL LOANS COMMODITIES CONSUMER CONSUMER GOODS CORPORATE GOVERNANCE CREDITOR CREDITOR RIGHTS CREDITORS CURRENT DEBT DEBT DEBT ACCUMULATION DEBT BURDEN DEBT BURDENS DEBT FORGIVENESS DEBT LEVELS DEBT OBLIGATIONS DEBT OVERHANG DEBT PROBLEMS DEBT REDUCTION DEBT RELIEF DEBT RELIEF INITIATIVE DEBT RELIEF INITIATIVES DEBT RELIEF PACKAGE DEBT SERVICE DEBT STOCK DEBT STOCK REDUCTIONS DEBT SUSTAINABILITY DEBT SUSTAINABILITY ANALYSIS DEBTOR DEBTOR COUNTRIES DEBTS DEPENDENT DEVELOPING COUNTRIES DEVELOPMENT BANK DIVIDEND DUMMY VARIABLE EARNINGS ECONOMIC COSTS EFFECT OF DEBT EMERGING MARKETS EMERGING STOCK MARKET EMERGING STOCK MARKETS EMPLOYMENT EQUIPMENT EXCESSIVE DEBT EXPENDITURE EXPROPRIATION FINANCIAL MARKETS FINANCIAL SERVICES FINANCIAL SUPPORT FOREIGN CREDITORS GLOBAL MARKETS GOVERNMENT REVENUE HOLDINGS HOST COUNTRY HUMAN CAPITAL ILLIQUIDITY IMPACT OF DEBT IMPLICIT TAX INCOME INCOME TAXES INDEBTED INDEBTED POOR COUNTRIES INFORMATION TECHNOLOGY INTEREST RATES INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL DEVELOPMENT INTERNATIONAL FINANCE INVESTMENT CORPORATION INVESTMENT OPPORTUNITIES INVESTMENT PROJECTS LEVELS OF DEBT LIFE ASSURANCE LOCAL GOVERNMENTS LOW INCOME LOW- INCOME LOW-INCOME LYON MACROECONOMIC CONDITIONS MACROECONOMIC PERFORMANCE MACROECONOMICS MAJOR DEBT MARKET CAPITALIZATION MARKET RETURN MARKET TURNOVER MASSIVE DEBT MONETARY FUND MULTILATERAL DEBT MULTILATERAL DEBT RELIEF OPEN ECONOMIES PAR VALUE PARENT COMPANIES PARENT COMPANY POLITICAL ECONOMY PORTFOLIO PRESS COVERAGE PRIVATE CREDIT PRIVATE INVESTMENT PROBABILITY PUBLIC DEBT PUBLIC EXPENDITURE PUBLIC GOODS REAL EXCHANGE RATE RECIPIENT COUNTRIES REGIONAL DEVELOPMENT BANKS RENTS REPAYMENT RESEARCH ASSISTANCE RETURN RETURNS SALES SECURITIES SENIOR SHARE PRICES SOVEREIGN DEBT STOCK EXCHANGE STOCK MARKETS STOCK OF DEBT STOCK RETURN STOCK RETURNS STOCKS SUBSIDIARIES SUBSIDIARY SUBSTANTIAL DEBT SUBSTANTIAL DEBT RELIEF TAXATION TRADING TYPE OF DEBT VALUABLE VALUATION VALUE OF DEBT WORLD MARKETS WORTH |
| spellingShingle |
ACCOUNTING AFFILIATES ASSETS BASIS POINTS BILATERAL CREDITORS BUSINESS TAXES BUYBACK CAPITAL FORMATION CHECKS COLLECT DEBT COMMERCIAL CREDITORS COMMERCIAL LOANS COMMODITIES CONSUMER CONSUMER GOODS CORPORATE GOVERNANCE CREDITOR CREDITOR RIGHTS CREDITORS CURRENT DEBT DEBT DEBT ACCUMULATION DEBT BURDEN DEBT BURDENS DEBT FORGIVENESS DEBT LEVELS DEBT OBLIGATIONS DEBT OVERHANG DEBT PROBLEMS DEBT REDUCTION DEBT RELIEF DEBT RELIEF INITIATIVE DEBT RELIEF INITIATIVES DEBT RELIEF PACKAGE DEBT SERVICE DEBT STOCK DEBT STOCK REDUCTIONS DEBT SUSTAINABILITY DEBT SUSTAINABILITY ANALYSIS DEBTOR DEBTOR COUNTRIES DEBTS DEPENDENT DEVELOPING COUNTRIES DEVELOPMENT BANK DIVIDEND DUMMY VARIABLE EARNINGS ECONOMIC COSTS EFFECT OF DEBT EMERGING MARKETS EMERGING STOCK MARKET EMERGING STOCK MARKETS EMPLOYMENT EQUIPMENT EXCESSIVE DEBT EXPENDITURE EXPROPRIATION FINANCIAL MARKETS FINANCIAL SERVICES FINANCIAL SUPPORT FOREIGN CREDITORS GLOBAL MARKETS GOVERNMENT REVENUE HOLDINGS HOST COUNTRY HUMAN CAPITAL ILLIQUIDITY IMPACT OF DEBT IMPLICIT TAX INCOME INCOME TAXES INDEBTED INDEBTED POOR COUNTRIES INFORMATION TECHNOLOGY INTEREST RATES INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL DEVELOPMENT INTERNATIONAL FINANCE INVESTMENT CORPORATION INVESTMENT OPPORTUNITIES INVESTMENT PROJECTS LEVELS OF DEBT LIFE ASSURANCE LOCAL GOVERNMENTS LOW INCOME LOW- INCOME LOW-INCOME LYON MACROECONOMIC CONDITIONS MACROECONOMIC PERFORMANCE MACROECONOMICS MAJOR DEBT MARKET CAPITALIZATION MARKET RETURN MARKET TURNOVER MASSIVE DEBT MONETARY FUND MULTILATERAL DEBT MULTILATERAL DEBT RELIEF OPEN ECONOMIES PAR VALUE PARENT COMPANIES PARENT COMPANY POLITICAL ECONOMY PORTFOLIO PRESS COVERAGE PRIVATE CREDIT PRIVATE INVESTMENT PROBABILITY PUBLIC DEBT PUBLIC EXPENDITURE PUBLIC GOODS REAL EXCHANGE RATE RECIPIENT COUNTRIES REGIONAL DEVELOPMENT BANKS RENTS REPAYMENT RESEARCH ASSISTANCE RETURN RETURNS SALES SECURITIES SENIOR SHARE PRICES SOVEREIGN DEBT STOCK EXCHANGE STOCK MARKETS STOCK OF DEBT STOCK RETURN STOCK RETURNS STOCKS SUBSIDIARIES SUBSIDIARY SUBSTANTIAL DEBT SUBSTANTIAL DEBT RELIEF TAXATION TRADING TYPE OF DEBT VALUABLE VALUATION VALUE OF DEBT WORLD MARKETS WORTH Raddatz, Claudio Multilateral Debt Relief through the Eyes of Financial Markets |
| geographic_facet |
The World Region The World Region |
| relation |
Policy Research working paper ; no. WPS 4872 |
| description |
The economic benefits of debt relief for
recipient countries have been the subject of arduous debate,
at least partly motivated by the difficulty of identifying
the causal effect of debt relief on economic
performance-given that performance itself may drive the
decision to grant relief. This paper conducts an event study
to assess the economic consequences of multilateral debt
relief for recipient countries that is robust to these
reverse causality issues. It estimates the response of the
stock prices of South African multinationals with
subsidiaries in those countries to the announcement of debt
relief initiatives, and shows that stock prices exhibit a
significant increase above those of other firms, especially
around the launching of the recent Multilateral Debt Relief
Initiative. The improvement in financial markets'
assessment of the value of these multinationals is
consistent with lower expected levels of future taxation in
the recipient countries. Overall, the results are consistent
with the "debt overhang" argument for debt relief. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Raddatz, Claudio |
| author_facet |
Raddatz, Claudio |
| author_sort |
Raddatz, Claudio |
| title |
Multilateral Debt Relief through the Eyes of Financial Markets |
| title_short |
Multilateral Debt Relief through the Eyes of Financial Markets |
| title_full |
Multilateral Debt Relief through the Eyes of Financial Markets |
| title_fullStr |
Multilateral Debt Relief through the Eyes of Financial Markets |
| title_full_unstemmed |
Multilateral Debt Relief through the Eyes of Financial Markets |
| title_sort |
multilateral debt relief through the eyes of financial markets |
| publishDate |
2012 |
| url |
http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090323094828 http://hdl.handle.net/10986/4067 |
| _version_ |
1764389768281456640 |