Discussion Paper Series 2008-E-10

Crises and Sudden Stops: Evidence from International Bond and Syndicated-Loan Markets

Graciela L. Kaminsky

The crises in Mexico, Thailand, and Russia in the 1990s spread quite rapidly to countries as far apart as South Africa and Pakistan. In the aftermath of these crises, many emerging economies lost access to international capital markets. Using data on international primary issuance, this paper studies the determinants of contagion and sudden stops following those crises. The results indicate that contagion and sudden stops tend to occur in economies with financial fragility and current account problems. They also show that high integration in international capital markets exposes countries to sudden stops even in the absence of domestic vulnerabilities.

Keywords: contagion; financial integration; globalization; international primary issuance; sudden stops

Views expressed in the paper are those of the authors and do not necessarily reflect those of the Bank of Japan or Institute for Monetary and Economic Studies.

Copyright © 2008 Bank of Japan All Rights Reserved.

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