U.S. Banks' Lending to Developing Countries: A Longer-Term View

Abstract

There was very little net new lending by U.S. banks to developing countries in 1983-84, following the heavy lending of preceding years. When non-spontaneous lending to Brazil, Mexico and some other Latin American countries is deducted, there was an absolute decline in U.S. banks' claims on these countries. However, estimates of net new lending based on charges in outstanding claims understate the amount of net new lending to these countries in 1983-84 by an amount on the order of $3-1/2 billion. This is because outstanding claims were reduced by a number of factors other than repayments; such factors included loan charge-offs, sales of claims to non-bank investors, the exercise of official guarantees, and the statistical effects of exchange rate charges. Other aspects of U.S. bank lending to develop countries in 1983-84 were an increased concentration of the outstanding claims at the largest banks, and an increased concentration of the claims towards the public sector of the borrowing countries.