ABSTRACT
Various hypotheses have emerged in the wake of the international debt crisis. The most popular among them was the “loan pushing” hypothesis. Pushing loans implies a drastic softening of terms relative to the expectations of the potential borrowers. According to this view, spreads charged on bank loans to LDCs bear no correspondence to the risks associated with such lending. Proponents of this “doctrine,” e.g., Darity (1986), suggest that banks have engaged in self-victimization by advancing credit to foreign borrowers who have less than a prayer of making repayment.
