Limited national credit accessibility

Other Names:
Decline in commercial bank lending to vulnerable countries
Undeveloped international credit lines
Lack of local government credit
Inadequate international credit monies
Insufficient global credit capital

[Developing countries] The decline in commercial bank lending to developing countries throughout the 1980s, at a time when the financing needs of these countries were growing because of weakness in their export markets, demonstrated the pro-cyclical character of such lending. The simultaneous action by banks, a form of herd instinct, owes much to the practice of syndication. Thus rather than help to insulate developing countries receiving such flows from external pressures, bank lending became an added source of disturbance. Total annual bank lending (including short-term) to developing countries dropped precipitously in 1982-83 and by 1985 was approximately 25% of the 1981 level.

Problem Type:
D: Detailed problems
Date of last update
07.11.2017 – 16:50 CET