Debt can give a creditor considerable bargaining power before a threat is used. In the bank analogy, a borrower might initially comply with demands about whom to associate with. The same pressure then encourages repayment, a new creditor, or another means of escaping interference. Applied to countries, the argument is that using the threat can undermine its future value and may even encourage default.
Notable Point · 8:13-9:50
Debt pressure can drive a borrower toward other creditors
A creditor's threat may secure short-term compliance while encouraging repayment, refinancing or default.