Abstract
Current thinking on the causes of war focuses on bargaining strategies, resources on hand, and the ability to make transfers as drivers of conflict. This view ignores the important role access to credit can play in shaping war and peace. We explore how financial markets impact the potential for interstate war. We demonstrate that access to capital markets increase the possibility of peace, but preventive war remainspossible. The effects of the market on crisis outcomes is through the price of debt and that prices are determined by market conditions like the risk free interest rate and state specific conditions like the likelihood of default.
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