前沿 | 樊海潮等：Domestic Creditor Rights and External Private Debt

Haichao Fan,Xiang Gao. 'Domestic Creditor Rights and External Private Debt',Economic Journal,2017.

Haichao Fan

Institute of World Economy, School of Economics, Fudan University,

Xiang Gao

Shanghai University of Finance and Economics

Abstract:

This article unbundles institutions protecting domestic and foreign creditors' rights. We estimate a negative relation between the degree of domestic rights protection and the external stock of private non-guaranteed debt in 85 developing countries. A supply-side explanation is that strong domestic protection supports reliable outside financing options for potential external debt defaulters; foreign investors anticipating this would tighten credit constraints ex ante. Then we formalise the argument in a private borrowing and default model, and show that centralisation is no longer necessarily welfare superior.

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