Re-Accessing International Capital Markets After Financial Crises: Some Empirical Evidence

Abstract

This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.The paper analyzes the factors that contribute to the re-access of countries that emerge from a severe financial crisis to the international capital markets. It conjectures that these factors depend on a sovereign's commitment and ability to repay its foreign debt, signaled by sound macroeconomic policies, and the global liquidity environment. Using panel data for 49 countries over a 24-year period, the analysis uses a simple probit approach to show that, indeed, a sustainable debt profile and a sound external position, accompanied by a favorable global liquidity environment, are key factors in affecting the likelihood a sovereign reaccesses international capital markets. JEL Classification Numbers: F34, G15, O10

The Legacy and the Tyranny of Time: Exit and Re‐Entry of Sovereigns to International Capital Markets

“…Our work investigates the determinants of the duration of market re-entry spells. In this context, the existing studies confirm the relevance of sound domestic policies and external positions, institutional quality and the country's reputation in explaining the access to international capital markets (Fostel and Kaminsky, 2007;Gelos et al 2011;Zanforlin, 2007).…”