ABILITY AND WILLINGNESS TO SERVICE DEBT AS EXPLANATION FOR COMMERCIAL AND OFFICIAL RESCHEDULING CASES

This is a study of debt servicing capacities of LDCs. A common characteristic of the large number of such studies is that they use an eclectic list of explanatory variables. Here a set of explanatory variables is obtained from a willingness-to-pay model. Furthermore, earlier studies did not differentiate among different rescheduling cases. Differentiating based on the type of loans rescheduled, empirical tests have been implemented. Results indicate that explanatory variables are highly significant in explaining the occurrence of commercial and official reschedulings. However, a different set of variables has affected rescheduling decisions of borrowers on commercial and official loans. © 1991.