The External Debt Overhang Problem as a Threat to Global Financial Security

• Autorzy: Magdalena Redo
• Języki publikacji: EN

Abstrakty

EN

The aim of the study is to analyze the external debt's level in countries all over the world and to indicate that credibility is one of the most important factors which limit countries' access to external financing, its cost and determine vulnerability of those countries to shocks. On the basis of the analysis of statistic data an international comparison was made with the use of the inductive reasoning methodology. The study also overviews the threats triggered by the external debt overhang issue, not only in the case of indebted countries but also for financial security of global economy. According to International Monetary Fund (IMF) data, global debt of the nonfinancial sector at the end of 2015 reached USD 152 trillion (which is 225% of world GDP), where 2/3 comes from private sector debt. Even though it is stressed that public debt is not the main concern, it must be noted that the public debt overhang weakens private sector and reduces the effectiveness of deleveraging process, especially in the context of financial recession. The increase in public debt makes higher the treasury bonds' yield and the cost of capital, which consequently causes the decrease in creditworthiness and payment capacity of private entities. (fragment of text)

Słowa kluczowe

EN

External debt; Financial security; Emerging markets; Fiscal stability

PL

Dług zagraniczny; Bezpieczeństwo finansowe; Rynki wschodzące; Stabilność fiskalna

• Czasopismo: Law and Administration in Post-Soviet Europe
• Rocznik: 2018
• Numer: vol. 5, iss. 1
• Strony: 28--34

Twórcy

autor

Magdalena Redo

• Nicolaus Copernicus University, Poland

Bibliografia

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Identyfikatory

DOI

10.2478/lape-2018-0004