U.S. Commercial Banks and the Developing-Country Debt Crisis

Harry Huizinga and

HH

Harry Huizinga Harvard University

Jeffrey D. Sachs

JDS

Jeffrey D. Sachs

Discussants: John B. Shoven

John B. Shoven Charles R. Schwab Professor of Economics - Stanford University, and NBER

THE DEBT CRISIS of the less developed countries broke out in August 1982, with the announcement by Mexico that it would be unable to meet debt obligations then falling due. Since then, more than forty developing countries have been forced to reschedule debts with commercial bank creditors and to seek additional lending and other forms of relief from the international financial community’. From the inception of the debt crisis, the primary U.S. concern has been the risks to the major U.S. commercial banks, whose exposure in the developing countries has significantly exceeded their total bank capital.