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The business of development: trends in lending by multilateral development banks to Latin America, 1980-2009


Humphrey, Christopher; Michaelowa, Katharina (2010). The business of development: trends in lending by multilateral development banks to Latin America, 1980-2009. CIS Working Paper 65, University of Zurich.

Abstract

In this paper we investigate how country shareholding arrangements affect the lending of multilateral development banks (MDBs) under different economic conditions and over time. To do so, we consider three different “types” of MDBs—one dominated by non-borrowers (the World Bank), another controlled by borrowing countries (the Corporación Andina de Fomento, CAF), and a third where control is more evenly split between borrowers and non-borrowers (the Inter-American Development Bank, IADB)—and a common set of borrowing countries in Latin America. Descriptive statistics as well as econometric analysis based on seemingly unrelated regression estimation (SURE) and panel regressions indicate that the lending of the three MDBs does indeed react in a systematically different way to specific economic conditions. As a general trend, countries increasingly favor the CAF and IADB as a source of multilateral borrowing, while during crisis times World Bank lending tends to increase significantly and more strongly than lending by the CAF. IADB lending also increases very strongly during crises, but remains at a relatively high level throughout. In line with expectations based on the different shareholder arrangements, the paper also finds links between borrower government policy stances and World Bank/IADB lending, but none for the CAF.

Abstract

In this paper we investigate how country shareholding arrangements affect the lending of multilateral development banks (MDBs) under different economic conditions and over time. To do so, we consider three different “types” of MDBs—one dominated by non-borrowers (the World Bank), another controlled by borrowing countries (the Corporación Andina de Fomento, CAF), and a third where control is more evenly split between borrowers and non-borrowers (the Inter-American Development Bank, IADB)—and a common set of borrowing countries in Latin America. Descriptive statistics as well as econometric analysis based on seemingly unrelated regression estimation (SURE) and panel regressions indicate that the lending of the three MDBs does indeed react in a systematically different way to specific economic conditions. As a general trend, countries increasingly favor the CAF and IADB as a source of multilateral borrowing, while during crisis times World Bank lending tends to increase significantly and more strongly than lending by the CAF. IADB lending also increases very strongly during crises, but remains at a relatively high level throughout. In line with expectations based on the different shareholder arrangements, the paper also finds links between borrower government policy stances and World Bank/IADB lending, but none for the CAF.

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Additional indexing

Item Type:Working Paper
Communities & Collections:06 Faculty of Arts > Institute of Political Science
Dewey Decimal Classification:320 Political science
Language:English
Date:2010
Deposited On:14 Feb 2018 14:56
Last Modified:17 Feb 2018 19:17
Series Name:CIS Working Paper
Number of Pages:30
ISSN:1662-7504
OA Status:Green
Free access at:Official URL. An embargo period may apply.
Official URL:https://www.ethz.ch/content/dam/ethz/special-interest/gess/cis/cis-dam/Research/Working_Papers/WP_2010/2010_WP65_Humphrey_Michaelowa.pdf
Related URLs:http://www.cis.ethz.ch/research/working-papers.html (Organisation)
http://www.recherche-portal.ch/ZAD:default_scope:ebi01_prod009581601 (Library Catalogue)

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