The Maturing Crisis: 1983–87
The period from 1983 to 1987 has been one of substantial change in international capital markets as banks have sought to protect themselves from the deteriorating qualities of their portfolios while at the same time maintaining profit performance. There are both hopeful and depressing signs in the developments that have taken place. On the one hand, financial markets have shown a considerable degree of maturity and resilience to bad news. Collaboration amongst banks in restructuring debt and the positive assistance of the Bank for International Settlements, the International Monetary Fund and the World Bank either in terms of moral suasion or joint funding has averted a major collapse that could have led to a severe economic contraction. On the other hand, banks do not appear to have learned anything from their recent experience. In an attempt to restructure their portfolios and enhance their profits they have undertaken activities which may prove in the long run to be more risky than their lending activities of the 1970s.
KeywordsBank Loan Trade Credit Debt Crisis Secondary Market Interest Payment
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