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In current conditions, state support for international crediting for the corporate sector development in Ukraine has become a relevant tool of economic policy due to difficult geopolitical situation, military challenges and urgency of the post-war recovery. Significant damage to infrastructure, production facilities and loss of labor potential cause the required large-scale investment. Wartime conditions and lack of long-term capital in the domestic market require export diversification and development of new markets. Therefore, state support for international crediting is important in providing access to financial resources for business recovery, creation of infrastructure and jobs, as well as attracting additional capital from abroad, which is critical for large and medium-sized enterprises. Within the article, existing theoretical models that consider state support as a mechanism to stimulate economic growth are studied, their essence and impact tools on development of international crediting is researched. This allowed making a conclusion that Ukraine has a combined approach of state regulation and support for international crediting for corporate sector of the economy, which combines elements of several theories and state intervention, namely the Keynesian theory and state capitalism. In addition, within the article, the list of international financial institutions that are currently actively cooperating with Ukraine and examining today’s situation of international crediting to corporate sector of Ukraine is clarified. When studying of the IFI activities, main obstacles to attract international credits by the Ukrainian corporate sector is identified by the author, namely: high level of credit risk, currency fluctuations in domestic financial market, corruption, lack of transparency of corporate business enterprises and unstable economic environment. Based on their detailed consideration, directions of state support for international crediting of corporate sector are formulated by the author. It was found within the study that state support for international crediting is a strategically important component in recovery and strengthening of corporate sector in Ukraine, ensuring business stability, promoting economic growth, integration with international markets and enhancing country’s competitiveness in the global market. [ABSTRACT FROM AUTHOR]

This paper explores the origins of German banks' risk‐taking in the years preceding the 1931 crisis. The 1920s were marked by a large and prolonged increase in capital flows into Germany, chiefly from the United States and the United Kingdom. This coincided, at the individual bank level, with a rise in leverage and a fall in liquidity. We examine possible connections between the two phenomena. Our analysis is based on a combination of historiographical work and statistical modelling based on a newly hand‐collected bimonthly dataset on German reporting banks from 1925 to 1935. Bank by bank we examine the effects of foreign inflows on decisions related to leverage, lending, and liquidity. The Dawes Plan of 1924 and the relative absence of a too‐big‐to‐fail (TBTF) environment allow us to mitigate endogeneity concerns. We suggest that while capital inflows did not seem to impact banks' liquidity decisions, their impact on leverage was non‐negligeable. [ABSTRACT FROM AUTHOR]

Over the past 20 years, China has granted a conspicuous amount of loans to African countries. New loan data show that compared to Western multilateral loans, Chinese loans have relatively high interest rates and shorter maturities, tend to be highly collateralized, and are volatile over time. Thus, Western loans are generally more likely to be in the economic interest of the borrowing country. Furthermore, Chinese loans are focused on resource-rich countries that undertake fewer anti-corruption efforts, so local policymakers have more opportunities to feather their own nest. Finally, unlike Western loans, Chinese loans are not tied to any economic policy conditions. It seems worth considering for Western lenders to reduce the number and intensity of loan conditions to respect the sovereignty of the borrowing countries. [ABSTRACT FROM AUTHOR]

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This paper first describes the Bretton Woods system: its origin, what it was meant to achieve, and why it collapsed. We then describe the emergence of the global non-system in which inflation targeting has replaced full-employment Keynesianism and floating exchange rates have replaced the Bretton Woods set-up of fixed but adjustable exchange rates. We describe how the Bretton Woods system set about achieving the three objectives laid down for a well-functioning international economic system by John Maynard Keynes: full employment without inflation, sustainable current account balances between countries, and a sustainable flow of international financial capital—on the understanding that an open trading regime is also fostered. Because the global non-system is now very different from the Bretton Woods system, Keynes's objectives now need to be achieved in a very different manner. Looking forward, this non-system faces a number of longer-term challenges. Important adjustment issues will arise in relation to the global demographic transition; the potential long-term slowdown in productivity growth; and the rise in investment in renewable sources of energy which will be necessary to help ensure that the world is able to move towards zero emissions of carbon by 2050. We also discuss important policy issues in relation to the flows of international capital to emerging market economies, and the likely need for a sovereign debt reconstruction mechanism. We then go on to consider two significant structural changes to the world—the emergence of the European Monetary Union and the rise of China. A final section of the paper considers the importance of leadership in this global non-system. [ABSTRACT FROM AUTHOR]

Existing models of international organizations focus on the strategic and commercial interests of major shareholders to explain why some countries secure better deals from international organizations. Focusing on the International Monetary Fund (IMF), we argue that the Fund's major shareholders pressure the IMF to minimize short-term adjustment costs in the borrowing country when they host a large number of the country's nationals. Stringent loan packages often exacerbate short-term economic distress in the borrowing country, which in turn causes more people to migrate to countries where their co-ethnics reside. Analyzing all IMF programs from 1978 to 2014, we assess our hypothesis that IMF borrowers with larger diasporas in the major IMF shareholder countries tend to secure better arrangements from the IMF. Our findings show that when migration pressures on the G5 countries increase, borrowing countries receive larger loan disbursements and fewer conditions. Los modelos existentes de organizaciones internacionales se centran en los intereses estratégicos y comerciales de los principales accionistas para explicar por qué algunos países obtienen mejores tratos por parte de las organizaciones internacionales. Centrándonos en el Fondo Monetario Internacional (FMI), argumentamos que los principales accionistas del Fondo presionan al FMI para que minimice los costes de ajuste a corto plazo en el país prestatario cuando acogen a un gran número de ciudadanos de ese país. Los severos paquetes de préstamos suelen exacerbar las dificultades económicas a corto plazo en el país prestatario, lo que a su vez provoca que más personas emigren a países donde residen otros de sus compatriotas. Analizando todos los programas del FMI desde 1978 hasta 2014, evaluamos nuestra hipótesis de que los prestatarios del FMI con mayores diásporas en los principales países accionistas del FMI tienden a obtener mejores acuerdos por parte del FMI. Nuestras conclusiones muestran que cuando aumentan las presiones migratorias en los países del G5, los países prestatarios reciben mayores desembolsos de préstamos y con menos condiciones. Les modèles actuels d'organisations internationales se focalisent sur les intérêts stratégiques et commerciaux des actionnaires majoritaires pour expliquer pourquoi certains pays obtiennent de meilleurs accords auprès des organisations internationales. En nous concentrant sur le Fonds monétaire international (FMI), nous affirmons que ses actionnaires majoritaires appliquent une certaine pression pour réduire les coûts d'ajustement à court terme du pays emprunteur, quand un grand nombre de ressortissants de ce pays vit chez eux. Les prêts aux conditions strictes aggravent souvent la détresse économique à court terme dans le pays emprunteur. Cette situation renforce ensuite fréquemment l'immigration vers les pays où des compatriotes résident. Après l'analyse de tous les programmes du FMI de 1978 à 2014, nous évaluons notre hypothèse : quand les emprunteurs disposent d'une diaspora plus importante dans les pays actionnaires majoritaires du fonds, ils obtiennent de meilleurs accords auprès du FMI. Nos résultats montrent que lorsque la pression migratoire sur les pays du G5 s'accroît, les pays emprunteurs reçoivent des versements de prêt plus importants et sont soumis à moins de conditions. [ABSTRACT FROM AUTHOR]

This paper draws on newly expanded BIS government bond statistics to document how emerging market sovereigns have reduced their reliance on foreign currency denominated bonds since the emerging market crises of the 1990s. With external funding still important for emerging market governments, they have increasingly been able to borrow from foreign investors in their domestic currency. In this respect, emerging market governments are overcoming "Original Sin". The flipside of these developments is that foreign investors increasingly bear the currency risk associated with fluctuations in emerging market exchange rates, making foreign investors' portfolio decisions more sensitive to prevailing global financial conditions. Emerging markets thus remain vulnerable to reversals of investor sentiment in bond markets, whether or not they have outstanding debt in foreign currency. [ABSTRACT FROM AUTHOR]

This paper shows that weak legal and political institutions and high macroeconomic volatility shorten the maturity of cross-border bank lending. Although these results are confirmed in the previous literature, this paper uses a broader panel data set of 135 countries from 1983 to 2012. Data also suggest new finding that the maturity of international bank credit and per capita GDP are positively correlated. The share of debt incurred by banks shortens the maturity, while the share of debt incurred by governments lengthen the maturity of cross-border credit. Our results are robust after we control for potential endogeneity.

We study the role of global financial intermediaries in international lending. We construct a model of the world economy, in which heterogeneous borrowers issue risky securities purchased by financial intermediaries. Aggregate shocks transmit internationally through financial intermediaries' net worth. The strength of this transmission is governed by the degree of frictions intermediaries face in financing their risky investments. We provide direct empirical evidence on this mechanism showing that around Lehman Brothers' bankruptcy, emerging‐market bonds held by more distressed global banks experienced larger price contractions. A quantitative analysis of the model shows that global financial intermediaries play a relevant role in driving borrowing‐cost and consumption fluctuations in emerging‐market economies, during both debt crises and regular business cycles. The portfolio of financial intermediaries and the distribution of bond holdings in the world economy are key to determine aggregate dynamics. [ABSTRACT FROM AUTHOR]

In this article, I examine the claim that the morality of the international lending system should be assessed by looking at its effects on poverty. The claim I would like to defend is that it is not a necessary truth that aggravation of poverty under the current lending system is what makes this system unjust. Instead, I argue that, regardless on its efects of poverty, what makes the lending system unjust is that it allows wrongful loans. It is of course often the case that there is something wrong with lending, and that this flaw leads to poverty. However, in my view, the effects on poverty and the morality of loans can be conceptually independent from each other. Thus, it is misguided to measure poverty as a way of testing whether the lending system is just. I proceed as follows. First, I explain in some detail Pogge's view about lending and justice, as he is the main defender of the outcome-view that I am trying to refute. Second, I will show two possible concerns about Pogge's view. I will call the first one the 'agnosticism objection,' and the second one the 'normative limitation objection.' Third, I will briefly describe my own account of the conditions under which lending would count as wrongful (and non-binding). This account is an improvement over Pogge's account. [ABSTRACT FROM AUTHOR]

In this article, I make the idea that poverty outcomes are not necessarily morally relevant for assessing policies as clear as possible by discussing a specific case within the global justice debate: sovereign debts. The claim I would like to defend is that generating poverty among the population of a poor state as a result of a loan is independent from the fact that such debt is morally binding. People might become poorer as a result of a loan, and the loan might still be binding; and people might not be negatively affected as a result of a loan, and the loan might be non-binding. It is of course often the case that there is something wrong with lending that generates massive poverty. However, in my view, the fact that lending and poverty exist parallel to each other is not what makes a loan binding or non-binding. Thus, it is misguided to measure poverty as a way of testing the bindingness of a debt. I will proceed as follows. First, I will explain in some detail Pogge’s view about lending and justice, as he is the main defender of the outcome-view that I am trying to refute. Second, I will show two possible worries about Pogge’s view. I will call the first one the “agnosticism objection” and the second one the “normative limitation objection”. Third, I will briefly describe my own account of the conditions under which lending would count as non-binding. This account does not necessarily rely on outcomes.

The article analyzes the current trends of financing Russian non-financial companies, formed in the mid‑2010- is during the slowdown of the growth of the national economy, the reduction of foreign capital inflows and the introduction of anti-Russian sanctions.The purpose of the study is to analyze changes in the dynamics and structure of sources of financing of domestic companies that occurred in 2014–2017, as well as to assess possible measures to expand the availability of financial resources for them.We used general scientific methods of statistical analysis, scientific abstraction and logical generalization, as well as comparative and institutional approaches.The paper considers the dynamics and peculiarities of financing of Russian companies in 2014–2017. We established that despite the compression of foreign capital inflow that occurred in the specified period, the enterprises were able to largely compensate losses increasing borrowings from domestic banks and the corporate bond market, as well as obtaining financial support from the state in the framework of anti-crisis measures.The replacement of foreign financing with domestic sources allowed to maintain the stability of the corporate sector during the crisis period. However, today, when the economy is out of crisis and enterprises to need additional funds for business development, they face a limited supply of financial resources in the domestic market, mainly due to the sharp slowdown in the dynamics of bank lending to the real sector, observed since 2015.We conclude that in the conditions of reduction of capital imports the main reserve for increasing the availability of financial resources for the Russian enterprises is the increase of bank lending to the economy. In order to encourage it, the state should actively expand the practice of public-private partnership mechanisms in the financial and banking sector, including the provision of guarantees for loans and joint financing with banks of priority investment projects.

Possible reform of the global sovereign debt management framework is continuously discussed among the members of the policymaking community. After the evaporating Washington Consensus, several reform proposals were made. Some of them were realised, and others remained on paper. The area received new impulses after the Financial Crisis in 2008, mainly due to the European sovereign debt problems. Many of these suggestions were later forgotten. The worldwide fiscal stimuli caused by the COVID-19 pandemic in 2020 and the rapidly deteriorating sovereign debt situation induced another plethora of policy proposals. Some are novelties, but most are revised versions of the old ideas. The study aims to synthesise the old and newer suggestions, identifying current policy trends. The conclusion: the contractual approach still dominates the field, although there are also some feasible statutory-based ideas. [ABSTRACT FROM AUTHOR]

We analyze the effects of bailout expectations on sovereign bond spreads in emerging markets. The non-bailout of Russia in August 1998 is interpreted as an event that decreased the perceived probability of future crisis lending to emerging markets. If official rescues are expected to mitigate the losses of investors in the event of a crisis, such an event should raise the cross-country dispersion of spreads, because investors pay more attention to differences in risk characteristics across countries. We find strong evidence for such an effect. This is consistent with the existence of “investor moral hazard,” at least prior to 1998. [ABSTRACT FROM AUTHOR]

Because of the way that the international lending system works, poor nations have been forced to repay sovereign debts without having a moral obligation to do so. Suppose a corrupt public official borrows money from an international agency, or from private investors, and later on embezzles this money, or uses it to oppress the population. Suppose, further, that the lender is aware of the potential of this situation and still lends. Typically, the international community considers that successor governments have the obligation to repay the funds and the interests associated to them. In fact, this is what they usually end up doing. Public officials are all aware that if they do not honour sovereign debts, they will face all kinds of negative consequences, including exclusion from future markets, loss of reputation and legal sanctions. Owing to this mechanism, entire generations have been burdened with debts fraudulently incurred in their name by governments in the past. These kinds of debts have been known in the legal literature as ‘odious’. In this article, I discuss the conditions defining the bindingness of a debt. I suggest that they can be made explicit by looking at the rules under which the lending system works at the domestic level, and by then extending these rules to the international domain. I argue that, because of their plausibility, these are the rules that should govern international lending from now on. I also discuss the feasibility of extending these rules globally, and consider potential objections to my proposal.

Because of the way that the international lending system works, poor nations have been forced to repay sovereign debts without having a moral obligation to do so. Suppose a corrupt public official borrows money from an international agency, or from private investors, and later on embezzles this money, or uses it to oppress the population. Suppose, further, that the lender is aware of the potential of this situation and still lends. Typically, the international community considers that successor governments have the obligation to repay the funds and the interests associated to them. In fact, this is what they usually end up doing. Public officials are all aware that if they do not honour sovereign debts, they will face all kinds of negative consequences, including exclusion from future markets, loss of reputation and legal sanctions. Owing to this mechanism, entire generations have been burdened with debts fraudulently incurred in their name by governments in the past. These kinds of debts have been known in the legal literature as ‘odious’. In this article, I discuss the conditions defining the bindingness of a debt. I suggest that they can be made explicit by looking at the rules under which the lending system works at the domestic level, and by then extending these rules to the international domain. I argue that, because of their plausibility, these are the rules that should govern international lending from now on. I also discuss the feasibility of extending these rules globally, and consider potential objections to my proposal. [ABSTRACT FROM PUBLISHER]

This article investigates the systemic risk of cross-border banking in East Asia. Using the recursive bivariate probit model, we jointly test the probability of the sudden stop in international lending and its simultaneous effect on the host countries’ interbank markets. The empirical results suggest that the risk of a sudden stop is associated with global liquidity shock; host country productivity shock; and the common lender contagion effect. This facilitates the transmission of interbank stress from advanced economies to emerging markets. However, the tension is mitigated by the “flight-home effect” caused by domestic investors’ repatriation. The sudden stop is more likely to occur in countries with lower financial openness but higher financial risk. Lending flows to the banking sectors are more sensitive to shocks than the flows to the non-bank private sectors. [ABSTRACT FROM AUTHOR]

The ability of a country and its businesses to grow is tightly related to the possibility of exporting and penetrating into foreign markets. The aim of this article is to study whether bank support can help small businesses (SBs) exporting at the extensive as well as the intensive margin. We address this issue by using a large database on small Italian firms. We provide an empirical analysis of the role of bank support in affecting the firms' export decisions. Our results show that among the exporting SBs those using bank services to support their exports have a higher probability of being better placed in both the intensive and the extensive margin. Moreover, these positive impacts on export are statistically significant only when the main bank of the firm is an internationalized bank. These results have relevant policy implications as well as consequences for the business models of internationalized banks. [ABSTRACT FROM AUTHOR]

While often considered a purely financial institution, the IMF has throughout its history performed non-financial services for its membership. The latest example is the Policy Support Instrument (PSI), a certification mechanism established in 2005 for which only poor members are eligible. Based on a formal game-theoretic model, I argue that it is unlikely that the PSI will serve well the intention of facilitating capital market access for members requesting the service. Their low income, the lack of significant consequences for markets, the IMF's traditional reluctance to criticize members, as well as the need to promote the use of the new arrangement indicate that the Fund could emphasize participants' welfare over the interests of private lenders. The continued importance of foreign aid in eligible countries also puts the IMF in the role of gatekeeping such flows, which might conflict with sending clear signals to commercial actors. All these reasons imply that in many cases its seal of approval will be of little use to third-parties, despite the high standards to which PSI-countries are supposed to adhere. The best argument in favor of the PSI being a useful addition to the Fund's tool kit for low-income members is the fact that several countries have already signed a second one. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this paper is to show how network analysis can be used for effective cross-border financial surveillance, which requires the monitoring of direct and indirect systemic linkages. Design/methodology/approach – This paper illustrates how network analysis could make a significant contribution in this regard by simulating different credit and funding shocks to the banking systems of a number of selected countries. After that, the authors show that the inclusion of risk transfers could modify the risk profile of entire financial systems, and thus an enriched simulation algorithm able to account for risk transfers is proposed. Findings – Finally, the authors discuss how some of the limitations of the simulations are a reflection of existing information and data gaps, and thus view these shortcomings as a call to improve the collection and analysis of data on cross-border financial exposures. Originality/value – This paper is one of the very few to take a cross-border perspective on financial networks. It is also unique in accounting for risk transfers and in proposing a methodology to include the analysis (and monitoring) of risk transfers into a network model. [ABSTRACT FROM AUTHOR]

How well do countries cope with the aftermath of natural disasters? Do international financial flows buffer countries in the wake of disasters? This paper examines the impact of hurricanes on resource flows to developing countries. Using meteorological data, I construct a time-varying storm index taking into account the fraction of a country's population exposed to storms of varying intensities. Overall, hurricanes lead to large increases in foreign aid. For other types of international financial flows, the impact of hurricanes varies according to income level. For poorer countries, hurricanes lead to increases in migrants' remittances, so that total inflows from all sources in the three years following hurricane exposure amount to roughly four-fifths of estimated damages. For richer countries, by contrast, hurricanes stimulate inflows of new lending from multilateral institutions, but offsetting declines in private financial flows are so large that the null hypothesis of zero damage replacement cannot be rejected. [ABSTRACT FROM AUTHOR]

How well do countries cope with the aftermath of natural disasters? Do international financial flows buffer countries in the wake of disasters? This paper examines the impact of hurricanes on resource flows to developing countries. Using meteorological data, I construct a time-varying storm index taking into account the fraction of a country's population exposed to storms of varying intensities. Overall, hurricanes lead to large increases in foreign aid. For other types of international financial flows, the impact of hurricanes varies according to income level. For poorer countries, hurricanes lead to increases in migrants' remittances, so that total inflows from all sources in the three years following hurricane exposure amount to roughly four-fifths of estimated damages. For richer countries, by contrast, hurricanes stimulate inflows of new lending from multilateral institutions, but offsetting declines in private financial flows are so large that the null hypothesis of zero damage replacement cannot be rejected. [ABSTRACT FROM AUTHOR]

The global financial unrest over the last decade has shifted the attention of banking regulators (Basel II, 2001) in estimating default probabilities for a variety of borrowers. Within a binary choice panel data framework, the current study analyzes various models and cross-examines their performance in identifying financial crises in emerging markets. Using financial ratios, macroeconomic variables, and international factors, the paper identifies a set of warning indicators and discriminates among the three estimators employed. The most important determinants of commercial/official arrears and reschedulings are the debt-to-GDP ratio, inflation, trade liberalization, and the variability of GNP per capita growth. In addition to that, changes in financial flows from foreign investors do affect default frequencies, while external developments are found to be insignificant. Cross-modeling comparison indicates the presence of different exogenous risk factors, depending on the approach employed. Further analysis indicates the presence of heterogeneity, but pertinent estimators fail to perform well. Unlike the fixed- and random-effects estimators, the pooled-logit model yields the minimum number of misclassifications. When past credit performance is taken into account, the significance of some signals is reduced, but the model's misclassification performance is markedly enhanced. [ABSTRACT FROM AUTHOR]

This paper develops an information based theory of international bank lending that is compatible with the LDC debt story of the 1970s and 1980s and emphasises the importance of market structure as a factor contributing to financial crises. A feature of the market for sovereign loans, hitherto neglected, has been the leadership role played by a small group of major international money-centre banks and their subsequent influence over a much larger grouping of smaller, regional banks. Lending behaviour amongst such creditor heterogeneity is captured using a signalling model that takes into account the incomplete information environment created by sovereign risk. Our main finding is that the herd-like behaviour of the late 1970s and early 1980s may have, in part, been generated by large money-centre banks seeking to capitalise on their ability to influence the inferences and actions of their smaller rivals. [ABSTRACT FROM AUTHOR]