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Politics, International Banking, and the Debt Crisis of 1982

Published online by Cambridge University Press:  03 February 2021

Carlo Edoardo Altamura  and
Juan Flores Zendejas
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Abstract

How does politics affect private international lending? This article highlights the relationship between international banks, their home governments, the International Monetary Fund (IMF), and international regulators during the years that preceded the debt crisis of 1982. Based on new archival evidence from different case studies, we find that the decisions of commercial banks to lend were largely based on the home governments’ preferences, competition, and the assumption that home governments and international organizations would provide lender of last resort functions to support borrowing governments. While previous works suggest the 1982 debt crisis was unexpected, we show that banks primarily reacted to the deteriorating macroeconomic situation in many emerging economies once the support of their home governments and the IMF became uncertain.

Keywords

sovereign debtcommercial banksdebt crisispolitical economy
Type
Research Article
Information
Business History Review , Volume 94 , Issue 4 , Winter 2020 , pp. 753 - 778
Copyright
Copyright © The President and Fellows of Harvard College 2021

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Footnotes

We thank several anonymous referees and archivists at the BIS, IMF, OECD, Bank of France, Bank of England, Société Générale, Royal Bank of Scotland, and Lloyds Bank. Financial support from the Swiss National Science Foundation (Research projects: Ambizione Grant no. PZ00P1_179892/1 and CR11I1_162772) and from the Humanities in the European Research Area – HERA Joint Research Programme 3 “Uses of the Past” is gratefully acknowledged.

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