Bank Foreign Lending, Mandatory Disclosure Rules, and the Reaction of Bank Stock Prices to the Mexican Debt Crisis

Abstract

This paper examines the effects of the Mexican debt mora torium in August 1982 on bank valuation. The Mexican default resulted in the passage of regulations requiring public disclosure of bank fo reign-lending exposure. The authors find that, even in the absence of public disclosure regulations, investors were able to discriminate a mong banks with different levels of exposure. Copyright 1987 by the University of Chicago.