DP273 Foreign Lending in the Interwar Years: The Bondholders' Perspective
Author(s): | Barry Eichengreen, Richard Portes |
Publication Date: | September 1988 |
Keyword(s): | Foreign Bonds, International Debt, Sovereign Borrowing |
JEL(s): | 041, 433, 441 |
Programme Areas: | International Macroeconomics |
Link to this Page: | cepr.org/active/publications/discussion_papers/dp.php?dpno=273 |
This paper revises and extends our previous (1986) analysis of rates of return on sterling and dollar foreign loans of the 1920s. It analyzes a larger sample of 250 dollar bonds and 125 sterling issues, covering the years 1920-9. Internal rates of return are adjusted for repurchases of discounted foreign bonds. The larger sample confirms the main conclusions of our original study and enables us to paint a richer picture of interwar experience with foreign loans. We also analyze determinants of ex ante spreads on foreign loans relative to risk-free returns, and assess the sophistication of investors.