Private Bank Lending and Developing-Country Debt

Stephen J. Kees was Chief Librarian, Niagara College of Applied Arts and Technology, Welland, Ontario.

A recent feature of the balance sheets of many of the larger banks in North America has been the provision of funds to meet potential losses on loans that may not be repaid. Many of these loans were made during the 1970s to Third World countries, especially some in Latin America.

The work begins with a study of the origins of these problems, and the growth of the lending being provided by private banks as opposed to that provided by official agencies. The worldwide recession of the early 1980s caused many countries to try to renegotiate their debts, in order to stretch out their payment resources. Since the whole system has some fundamental weaknesses, this work suggests ways in which it could be changed for the better.

This short work is technical in its approach, but the documentation and bibliography are well developed and extensive. Since an upset in this system could cause a worldwide economic disaster, this narrative deserves to be widely read.