Modeling Determinants Of Debt Default In International Finance: Isolation, Magnitude, And Prediction

Abstract

The current Argentine debt crises scenario is representative of a climate of financial irresponsibility that does not show signs of waning and has regretfully become a permanent feature of the international financial landscape.

This ongoing study examines the evolution of irresponsible borrowing and lending behavior. Through the development of interpretive graphical models, the study hopes to demonstrate the predictability of defaults and to help in the detection of their timing and magnitudes. The isolation of these two factors may assist the global financial community to develop strategies to forestall and/or soften the impacts associated with financial catastrophes of this type.