(6)-Pugel-16e-Chapter21外匯市場國際金融

Chapter21:InternationalLendingandFinancialCrisesInternationalLendingInternationalflowsoffinancialclaimscanbedividedintodifferentcategoriesby:Typeoflenderorinvestor(privateorofficial)Maturity(long-termorshort-term)Existenceofmanagementcontrol(foreigndirectinvestment)ornotTypeofborrower(privateorgovernment)?2016McGraw-HillEducation.AllRightsReserved.2InternationalLendingPrivatelendingandinvesting1.Long-term

a.Directinvestment(investinginaforeignenterpriselargelyownedand

controlledbytheinvestor)b.Loans(toforeignborrowersnotcontrolledbythelender,withmaturity

ofmorethanoneyear,mostlybybanks)c.Portfolioinvestment(purchasingstocksandbondswithmaturityof

morethanoneyear,issuedbyaforeigngovernmentoraforeign

enterprisenotcontrolledbytheinvestor)

2.Short-term(lendingtoaforeignborrowernotcontrolledbythelender,or

purchasingbondsissuedbyaforeigngovernmentoraforeignenterprise

notcontrolledbytheinvestor,maturinginoneyearorless)B.Officiallendingandinvesting(byagovernmentoramultilateralinstitution

likeIMFortheWorldBank,mostlylending,bothlong-termandshort-term)?2016McGraw-HillEducation.AllRightsReserved.3InternationalLendingBenefitsItrepresentsanintertemporaltrade,inwhichthelendergivesupresourcestodayinordertogetmoreinthefuture,andtheborrowergetsresourcestodaybutmustbewillingtopaybackmoreinthefuture.Itallowslendersandinvestorstodiversifytheirinvestmentsmorebroadly.?2016McGraw-HillEducation.AllRightsReserved.4GainsandLossesfromWell-BehavedInternationalLending?2016McGraw-HillEducation.AllRightsReserved.5Nointernationallending:PointRFreeinternationallending:PointTGainsfromfreeinternationallending:AreaRSTArea(a+b+c)toJapanArea(d+e+f)toAmericaTaxesonInternationalLendingWehavecomparedfreeinternationallendingwithnointernationallendingandhavefoundtheorthodoxresult:Freedomraisesworldproductandnationalincomes.Anotherstandardresultalsocarriesoverfromtradeanalysis:thenationallyoptimaltax.Ifacountryloomslargeenoughtohavepowerovertheworldmarketrateofreturn,itcanexploitthismarketpowertoitsownadvantage,attheexpenseofothercountriesandtheworldasawhole.?2016McGraw-HillEducation.AllRightsReserved.6ActualInternationalLendingInternationallendingandborrowingareoftenwellbehavedLenderandborrowerusuallybenefitfromthegainsfromintertemporaltrade,ascountrieswithnetsavingsgethigherreturnsandcountriesthatarenetborrowerspaylowercostsInternationalfinancialinvestmentsareusedtolowerriskthroughportfoliodiversificationConflictssometimesariseovertaxpolicies,butthesearemanageable?2016McGraw-HillEducation.AllRightsReserved.7ActualInternationalLendingSometimesinternationallendingisnotwellbehavedInadeveloping-countryfinancialcrisis,theborrowingcountryexperiencesdifficultiesinservicingitsdebtsandoftendefaults—thatis,failstomakepaymentsasspecifiedinthedebtagreementsLenderscutbackorstopnewlending,astheborrowerisviewedastoorisky?2016McGraw-HillEducation.AllRightsReserved.8InternationalLendingtoDevelopingCountriesTheSurgeinInternationalLending1974-1982TheDebtCrisisof1982TheResurgenceofCapitalFlowsinthe1990sFinancialCrisesTheMexicanCrisis1994-1995TheAsianCrisis1997TheRussianCrisisArgentina’sCrisis2001-2002?2016McGraw-HillEducation.AllRightsReserved.9TheSurgeinInternationalLending1974-1982Theoilshocksofthe1970sledtoasurgeinprivateinternationallendingtodevelopingcountriesFourforcescombinedtocreatethesurgeRichoil-exportingcountrieshadahighshort-runpropensitytosaveoutoftheirextraincomeandtheytendedtoinvestthesesavingsinliquidform,especiallyinbondsandbankdepositsWidespreadpessimismabouttheprofitabilityofcapitalformationinindustrializedcountriesThe1970swasaneraofpeakresistancetoforeigndirectinvestment(FDI),inwhichtheforeigninvestor,usuallyamultinationalfirmbasedinanindustrializedcountry,keepscontrollingownershipofforeignaffiliatedenterprises“Herding”behaviormeantthatthelendingtodevelopingcountriesacquiredamomentumofitsownonceitbegantoincrease?2016McGraw-HillEducation.AllRightsReserved.10TheDebtCrisisof1982Whatcausedthecrisisin1982?InterestratesincreasedsharplyintheU.S.astheU.S.FederalReserveshiftedtoatightermonetarypolicytoreduceinflationTheU.S.andseveralotherindustrializedcountrieswereinasevererecessionDevelopingcountries’exportsdeclinedandcommoditypricesfellwhileinterestratesremainedhighThedebtors’abilitytorepayfelldramatically?2016McGraw-HillEducation.AllRightsReserved.11NetFinancialFlowstoDevelopingCountries1981-1996(BillionsofU.S.Dollars)?2016McGraw-HillEducation.AllRightsReserved.12NetFinancialFlowstoDevelopingCountries1997-2012(BillionsofU.S.Dollars)?2016McGraw-HillEducation.AllRightsReserved.13DevelopingCountries’ExternalDebtOutstanding,1970-2012($Billions)?2016McGraw-HillEducation.AllRightsReserved.14TheResurgenceofCapitalFlowsinthe1990sThesizeandscopeoftheBradyPlanledinvestorstobelievethatthepreviouscrisiswasbeingresolvedLowU.S.interestratesledlenderstoseekouthigherreturnsthroughforeigninvestmentsDevelopingcountrieswerebecomingmoreattractiveplacestolendasgovernmentsreformedtheirpoliciesIndividualinvestors,aswellasmutualfundsandpensionfunds,werelookingfornewformsofportfolioinvestmentsthatcouldraisereturnsandaddriskdiversification?2016McGraw-HillEducation.AllRightsReserved.15TheMexicanCrisis1994-1995Thegovernmentreplacedpeso-dominatedgovernmentdebtwithshort-termdollar-indexedgovernmentdebtcalledtesobonosLargeflightofcapital,mostlybyMexicanresidentswhofearedacurrencydevaluationandshiftedoutofpesosInvestorsrefusedtopurchasenewtesobonostopayoffthosecomingduebecauseitappearedthatthegovernmentdidnothavetheabilitytocoveritsdollarobligationsAsinvestorsreassessedtheirinvestmentsinemergingmarkets,theypulledbacknotonlyinMexicobutinmanyothercountries(the“tequilaeffect”)U.S.governmentpermittedMexicotoborrowmoneytopayoffthetesobonosastheymaturedandtoreplenishitreserveholdings?2016McGraw-HillEducation.AllRightsReserved.16TheAsianCrisis1997StruckfirstinThailandExpectationsofdecliningexportsledtolargedeclinesinThaistockpricesandrealestatevaluesExchangeratevaluedeclinedThenspreadtoIndonesia,SouthKorea,Malaysia,andthePhilippinesForeigninvestorslostconfidenceinlocalbankborrowersandlocalstockmarketsIMFbailoutcontainedthecrises,butthesecountrieswentintosevererecessions?2016McGraw-HillEducation.AllRightsReserved.17ExchangeRates,AsianCountries1994-2014?2016McGraw-HillEducation.AllRightsReserved.18TheRussianCrisis1998Largefiscaldeficit,governmentborrowingledtorapidincreasesingovernmentdebttobothdomesticandforeignlendersIMForganizedalendingpackagebutRussiafailedtoenactpolicychangesincludedasconditionsoftheloanRussiangovernmentrestructureditsruble-denominateddebt,wipingoutmostofthecreditors’valueRubledepreciatedbecauseofashifttoafloatingexchangerateTheIMFdeniedanadditionalloanandaforeignlenderselloffensuedthatcausestockandbondpricestoplummet?2016McGraw-HillEducation.AllRightsReserved.19Argentina’sCrisis2001-2002Argentina’spesohadatightlyfixedexchangeratetotheU.S.dollar,butArgentinalostinternationalpricecompetitiveness(appreciationofitsrealeffectiveexchangerate)Fiscaldeficitgrewaseconomywentintorecessionin1998.Privatecapitalinflowsstoppedin2000.Risinginterestratesmadetherecessionworse.IMFrefusedtomakeadditionalloansinlate2001.Bankswereclosed,pesodepreciationof75%inearly2002,governmentdefaultsonitsdebt,severerecession.?2016McGraw-HillEducation.AllRightsReserved.20FinancialCrises:WhatCanandDoesGoWrongWavesofoverlendingandoverborrowing2.Exogenousnegativeinternationalshocks3.Excessiveexposuretoexchangeraterisk4.Fickleinternationalshort-termlending5.Globalcontagion?2016McGraw-HillEducation.AllRightsReserved.21WavesofOverlendingandOverborrowingWell-behavedinternationallending:Lendersonlylend(andborrowersonlyborrow)forinvestmentprojectsthatgeneratethereturnsinthefuturethatcanbeusedtoservicethedebt.Notalwaystrue.Overlending/overborrowingcanresultfromexcessivelyexpansionarygovernmentpoliciesintheborrowingcountry,leadingtolargegovernmentbudgetdeficitsthatmustbefinanced.Overlendingcanalsobetobanksandotherprivateborrowers.?2016McGraw-HillEducation.AllRightsReserved.22WavesofOverlendingandOverborrowingOnceforeignlendersrealizethattoomuchhasbeenlentandborrowed,eachhastheincentivetostoplendingandtotrytogetrepaidasquicklyaspossible(beforeavailablemoneyrunsout).Allcannotberepaidquickly,andafinancialcrisiserupts.Theexcessivelending/borrowingthatcanleadtoafinancialcrisisissometimescalledadebtoverhang—theamountbywhichthedebtobligationsexceedthepresentvalueofthepaymentsthatwillbemadetoservicethedebt.?2016McGraw-HillEducation.AllRightsReserved.23TheSpecialCaseofSovereignDebt?2016McGraw-HillEducation.AllRightsReserved.24ExogenousInternationalShocksWhenexogenousinternationalshockshitacountry’seconomy,internationallendersandtheborrowermustreassesstheborrower’sabilitytomeetitsobligationstoserviceitsdebt.Forinstance,adeclineinexportearnings,perhapsduetoadeclineintheworldpriceofthecountry’skeyexportcommodity,makesitmoredifficultforthecountrytoserviceitsdebtandthusmorelikelytodefault.?2016McGraw-HillEducation.AllRightsReserved.25Exchange-RateRiskSometimestheformofthedebtscanhelpusunderstandfinancialcrises.IntheMexicanandAsiancrises,privateborrowerstookonlargeliabilitiesdenominatedinforeigncurrencywhileacquiringassetsvaluedinlocalcurrency.Theborrowerstookonthesepositionsexposedtoexchange-rateriskbecausetheyexpectedthatthegovernmentwouldcontinuetodefendthefixedorheavilymanagedexchange-ratevalueoftheforeigncurrency.?2016McGraw-HillEducation.AllRightsReserved.26Exchange-RateRiskWhenthelikelihoodofdevaluationordepreciationbecomesnoticeable,theborrowersattempttohedgetheirexposedpositionsbysellinglocalcurrency,butthisputsadditionalpressureonthegovernmentdefenseofthefixedexchangerate.Ifthegovernmentgivesupthefixedrate,borrowerssufferlossestotheextentthattheirpositionsarestillunhedged.?2016McGraw-HillEducation.AllRightsReserved.27

FickleInternationalShort-TermLending

Debt

thatisduetobepaidoffsooncancauseamajorproblembecauseforeignlenderscanrefusetorefinanceit.Short-termdebtisriskytotheborrowingcountrybecauseinternationallenderscanreadilyshiftfromoneequilibriumtoanother,basedontheiropinionofthecountry’sprospects.Inoneequilibrium,thelendersrefinanceorrollovertheshort-termdebt,andthiscancontinueintothefuture.Butarapidshifttoanotherequilibriuminwhichlendersdemandrepaymentisalsopossible.Iftheborrowingcountrycannotcomeupwiththepayoffquickly,afinancialcrisisoccurs.?2016McGraw-HillEducation.AllRightsReserved.28GlobalContagionWhenacrisishitsonecountry,itoftenspreadsandaffectsmanyothercountries.Itappearsthatsomekindofinternationalcontagionisatwork.Somecontagionistheresultofclosetradelinksbetweentheaffectedcountries;thus,acrisisdownturninonecountryhasspillovereffectsinanothercountry.?2016McGraw-HillEducation.AllRightsReserved.29GlobalContagionContagioncanbeanoverreactionbyforeignlendersastheyengageinascramblefortheexits.Somelendersimitateotherlenderswhomayhavebetterinformationabouttheborrowers.Lendersfearthatotherborrowingcountriesarelikelytohaveproblemssimilartothoseofthecrisiscountry,evenifthereisnoevidencethatthisistrue.Contagioncanbebelatedrecognitionoftrueproblemsinsimilarcountries—a“wake-upcall.”?2016McGraw-HillEducation.AllRightsReserved.30ResolvingFinancialCrisesRescuepackagesLoansintherescuepackagecompensateforthelackofprivatelendingduringthecrisisRestoresinvestorconfidencebyreplenishingofficialreserveholdingsLimitcontagioneffectsIMFimposesconditionsaspartofthelendingDebtrestructuringReschedulingchangeswhenpaymentsareduebypushingtherepaymentsschedulefurtherintothefutureReductionlowerstheamountofthedeb