This essay considers standard-form over-the-counter (OTC) derivatives contracts from an organizational perspective. OTC derivatives contracts are highly standardized and have a peculiar modular structure. Most are drafted by a single trade group, which is not party to the contracts. These...

Modification-proof contracts boost commitment and can help overcome information problems. But when such rigid contracts are ubiquitous, they can function as social suicide pacts, compelling enforcement despite significant externalities. At the heart of the current financial crisis is a contract...

Not long ago, financial markets in most poor and middle-income countries were shallow to nonexistent, and closed to foreigners. Governments often had to rely on risky borrowing abroad; the private sector had even fewer options. But between 1995 and 2005, domestic debt in the emerging markets grew...

Argentina recently completed the largest sovereign bond restructuring in history. As soon as the government announced the results of its $100 billion tender in March 2005, editorial pages worldwide heralded a new era for sovereign debt, for the emerging markets and, occasionally, for...

Standard contract terms are “sticky”: they rarely change, even if change appears to be in the parties' interest. Multiple theories to explain stickiness do not reach consensus on its causes. We investigate the role of stickiness in sovereign bond contracts, where it would be especially...

In response to debt crises, policy makers often feature Collective Action Clauses (CACs) in sovereign bonds among the pillars of international financial architecture. However, the content of official pronouncements about CACs suggests that CACs are more like doorknobs: a process tool with...