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Economic Commentary

The Costs of Default and International Lending

During the past few years, a number of less developed countries (LDCs) have had difficulty repaying their foreign debt. Sometimes payments have been suspended or delayedmaking it necessary for debtors and creditors to renegotiate or reschedule loan payments. These problems have raised questions about the costs and benefits of different types of debt repayment negotiations and their implications for the future of internationallending. This article investigates these questions.

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This paper and its data are subject to revision; please visit for updates.

Suggested Citation

Wang, Chien Nan. 1989. “The Costs of Default and International Lending.” Federal Reserve Bank of Cleveland, Economic Commentary 3/1/1989.

This work by Federal Reserve Bank of Cleveland is licensed under Creative Commons Attribution-NonCommercial 4.0 International