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Lending to the Borrower from Hell
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Lending to the Borrower from Hell: Debt, Taxes, and Default in the Age of Philip II

Mauricio Drelichman and Hans-Joachim Voth

Abstract

Why do lenders time and again loan money to sovereign borrowers who promptly go bankrupt? When can this type of lending work? As the United States and many European nations struggle with mountains of debt, historical precedents can offer valuable insights. This book looks at one famous case—the debts and defaults of Philip II of Spain. Ruling over one of the largest and most powerful empires in history, King Philip defaulted four times. Yet he never lost access to capital markets and could borrow again within a year or two of each default. Exploring the shrewd reasoning of the lenders who cont ... More

Keywords: money lenders, bankrupt, debt markets, default, King Philip II of Spain, capital markets, financial borrowing, finance, empire, sovereign debt

Bibliographic Information

Print publication date: 2014 Print ISBN-13: 9780691151496
Published to Princeton Scholarship Online: October 2017 DOI:10.23943/princeton/9780691151496.001.0001

Authors

Affiliations are at time of print publication.

Mauricio Drelichman, author
University of British Columbia

Hans-Joachim Voth, author
Universitat Pompeu Fabra