Debt crisis

from Wikipedia, the free encyclopedia

Of a debt crisis is spoken when a debtor to from his debt resulting debt service either temporarily ( liquidity crisis , moratorium ) or permanently ( solvency crisis can no longer meet).

General

Lenders have an interest in measuring their credit risk with the debtor. A large number of debt ratios are available for this. These are important control and decision parameters for the provision or retention of outside capital . While the interest burden rate only takes into account the interest expense of a borrower , the debt service coverage ratio also includes the repayments to be made. Interest expenses and repayments together form the debt or capital service . Among the interest rates include all interest expenses from interest-bearing liabilities result (except interest on pension provisions , bank charges ). The debt service coverage ratio indicates the extent to which the interest and repayments to be raised on loans can be paid by the debtor from his income.

Debtors who can get into a debt crisis are natural persons , companies or states (or their local authorities ). What they all have in common in the debt crisis is that they can no longer afford the interest payments and the repayment installments - summarized as debt servicing - in whole or in part. This can have two main causes. On the one hand, the debts can already be so high that the resulting debt service can no longer be covered by structurally declining income, on the other hand, there can be retrospective economic-related declines in income. In both cases, the debt service limit is exceeded. Debt was mostly assumed on the assumption that it would remain sustainable if the economy remained stable or even grew. Since the financial crisis from 2007 onwards , the term debt crisis has been narrowed down to states as debtors, but still applies to all types of debtors.

The situation of a debtor can be exacerbated by an exponentially growing interest rate problem, caused on the one hand by rising interest rates due to falling creditworthiness and on the other hand by compound interest effects .

Key figures

There are business indicators that show whether a particular debtor has a debt crisis or not. The debt crisis itself is not such a figure, but merely describes the debtor's economic condition. The debt ratio , the interest coverage ratio , the debt service coverage ratio and the debt service limit are school thinking numbers from which a debt crisis can be read. In a debt crisis, debt servicing can only be done by reducing assets (selling assets ), increasing equity or borrowed capital . However, these are not the natural sources for debt servicing, but solely the sustainably achievable excess liquidity.

consequences

From the reasons described, it follows that debts may only be dimensioned so high that the debt service resulting from them can still be provided in an economic or structural crisis. The debt service limit to be derived from this is determined differently for the different types of debtor. A state finds itself in a debt crisis when it can no longer service its foreign debts in accordance with the contract from sustainably achievable income (such as export earnings , interest income) and is possibly forced to reschedule . The debt service limit is reached in companies when the debt service from the operational liquidity surplus can just be met. In this borderline case, the debt crisis begins as an integral part of a corporate crisis . Private individuals get into a debt crisis when their current income (from wages / salaries , pensions ) is no longer sufficient to pay interest and repayments for loans they have taken out.

Depending on the economic status of the debt crisis and the degree of support by third parties, the debt crisis to a can -indebtedness , insolvency or sovereign default expand. A sovereign debt crisis can also lead to hyperinflation and currency reform or to a formal declaration of national bankruptcy ( Argentina crisis ). Debt crises are more common in developing countries , mostly triggered by current account deficits , but can also affect industrialized countries , as the Japanese crisis has shown.

Definition of terms

The concept of indebtedness must be distinguished from the legal concept of fault ; therefore the term “debt crisis”, which is often used instead of a debt crisis, is incorrect.

See also

literature

  • Evaristo Lopez Perez / Gonca Parlak (2005): Analysis of the theoretical and empirical model explanations about the types and causes of financial market crises, Norderstedt: GRIN Verlag, ISBN 978-3-638-84346-1
  • Thomas Ziesemer: Causes of debt crises - theory, empiricism and politics. Metropolis Publishing House. ISBN 3-89518-148-X (October 1997)

Individual evidence

  1. ↑ Evaristo Lopez Perez, Gonca Parlak, Analysis of the theoretical and empirical model explanations about the types and causes of financial market crises , 2005, ISBN 978-3-638-84346-1 , p. 13
  2. ↑ Peter Posluschny, Basiswissen Mittelstandscontrolling , 2010, p. 226
  3. ↑ Raoul Giebenhain, The Debt Crisis in Developing Countries and the Debt Rescheduling Programs of Multinational Institutions , 2006, p. 4 ff.
  4. ↑ Werner Lachmann, Economics 2: Applications , 2003, p. 504 f.