IDEAS home Printed from https://ideas.repec.org/a/cup/reveco/v36y2018i03p337-362_00.html
   My bibliography  Save this article

A Fatal Flaw: Domestic Banks And Mexico’S International Negotiating Position In The 1982 Debt Crisis

Author

Listed:
  • Alvarez, Sebastian

Abstract

The recent European debt crisis has renewed interest as to why debtor countries honour their foreign debts and subscribe to respectively burdensome rescheduling conditions. While the cost of defaulting in a domestic financial system has been recognised as a main motive for repayment, the factors that cause sovereign states to refrain from debt repudiation are not fully understood. This article investigates the reasons behind the repayment decision and weak negotiating position of the Mexican government following the 1982 debt crisis. It shows that leading commercial banks had considerable amounts of external loans in their books, and that Mexican policymakers lacked the foreign exchange access they needed to secure the stability of the domestic banking system. The high exposure of domestic banks to Mexican debt and their heightened dependence on foreign capital worked as mechanisms that allowed international creditors to enforce their claims and deterred Mexico from declaring a unilateral default.

Suggested Citation

  • Alvarez, Sebastian, 2018. "A Fatal Flaw: Domestic Banks And Mexico’S International Negotiating Position In The 1982 Debt Crisis," Revista de Historia Económica / Journal of Iberian and Latin American Economic History, Cambridge University Press, vol. 36(3), pages 337-362, December.
  • Handle: RePEc:cup:reveco:v:36:y:2018:i:03:p:337-362_00
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S0212610918000113/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sebastian Alvarez, 2020. "International Banking and Financial Fragility: The Contrasting Experience of Brazil and Mexico in the Lead-up to the 1982 Crisis," Oxford Economic and Social History Working Papers _176, University of Oxford, Department of Economics.
    2. Alvarez Sebastian, 2023. "Latin American Banks and Euromarkets: A View on the Process of Early Bank Globalization from the Periphery," Jahrbuch für Wirtschaftsgeschichte / Economic History Yearbook, De Gruyter, vol. 64(2), pages 489-527, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:reveco:v:36:y:2018:i:03:p:337-362_00. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/rhe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.