In recent decades nations around the world have experienced financial crisis. In some cases political leaders have contributed to the suddenness and magnitude of the crisis by initially providing overly optimistic assertions concerning the potential benefits of their financial liberalisation...

We investigate whether the spread of corporate debt contacts can be explained by their ultimate recovery rates. Using the actual realized recovery rates of defaulted debt instruments issued in the US from 1962 to 2007, we find that recovery rate is reflected in the spread at issuance, and that...