Abstract
The focus of this paper is on the interaction between a bail-out loan decision of a bank to a sovereign borrower and the adequacy of the bank's capital. The new loan is granted on two conditions: First, it must improve the likelihood of repayment of the outstanding loan; second the bank should have adequate capital.We find that in general a positive relationship exists between capital and the bail out loan and between existing debt and the new loan. However, under certain circumstances a negative relationship exists between the bank's capital and the new loan. Empirical results support the main implications of the theoretical model.
Original language | English |
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Pages (from-to) | 197-207 |
Number of pages | 11 |
Journal | International Journal of Phytoremediation |
Volume | 21 |
Issue number | 1 |
DOIs | |
State | Published - 1999 |
Keywords
- Bail-out loans
- Capital adequacy
- Sovereign debt