Lending Money to the  » Executioners » : the Case of the 1906 Russian Loan (Version préliminaire)

Mardi | 2014-03-25
Salle des thèses


The impact of sovereign debt repudiation is relatively well documented. The market reactions to warnings regarding a repudiation have however never been investigated. Are organized protests and the threat of a possible future repudiation perceived as credible by the markets? This paper analyzes the case of the Russian 1906 loan. Protests were staged against the loan which was viewed by the opposition to the autocratic tsarist regime as a loan which would help a despotic regime to further pressure its people. The paper shows that the market required a premium to hold such a controversial loan, and this despite the attempts made by the Russian government to present the loan as clean.