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International Monetary Fund

Lending by Multilateral Development Banks Gross multilateral development bank (MDB) lending to developing countries remained relatively flat over the second half of the 1990s and through 2001 ( Table 3.1 ). Lending did increase briefly, in 1998, as MDBs expanded financing to Brazil following its crisis. This trend of MDB gross financing is reflected in the nearly constant share of MDB disbursements in total disbursements to developing countries. However, unlike trends in gross financing over 1998–2001, net financing to developing countries exhibited a much

Chiara Broccolini, Giulia Lotti, Alessandro Maffioli, Mr. Andrea F Presbitero, and Rodolfo Stucchi

; Pereira dos Santos and Kearney, 2018 ; Gurara et al., 2018 ). In addition, to overcome or mitigate information asymmetries, private creditors can be willing to co-invest in the loan syndication with an MDB to take advantage of its technical expertise, monitoring capacity and better knowledge of the country/sector ( Chelsky et al., 2013 ; Ratha, 2001 ; Gurría et al., 2001 ). However, MDB lending could be a substitute rather than a complement to private finance, leading to crowding out rather than crowding in of private capital inflows ( Basílio, 2014 ; Bird and

Chiara Broccolini, Giulia Lotti, Alessandro Maffioli, Mr. Andrea F Presbitero, and Rodolfo Stucchi
We use loan-level data on syndicated lending to a large sample of developing countries between 1993 and 2017 to estimate the mobilization effects of multilateral development banks (MDBs), controlling for a large set of fixed effects. We find evidence of positive and significant direct and indirect mobilization effects of multilateral lending on the number of deals and on the total size of bank inflows. The number of lending banks and the average maturity of syndicated loans also increase after MDB lending. These effects are present not only on impact, but they last up to three years and are not offset by a decline in bond financing. There is no evidence of anticipation effects and the results are not driven by confounding factors, such as the presence of large global banks, Chinese lending and aid flows. Finally, the economic effects are sizable, suggesting that MBDs can play a vital role to mobilize private sector financing to achieve the goals of the 2030 Development Agenda.
Mr. Gerd Schwartz
This paper addresses an apparent lack of economic theory in the analysis of multilateral development bank (MDB) behavior. A simple comparative statics model that is adapted from the credit union literature is used to predict potential areas of conflict, agreement, and indifference between MDB member countries, analyze lending policies against the background of distributional conflicts, and show how various institutional reforms may improve efficiency and overall member country benefits.
Chiara Broccolini, Giulia Lotti, Alessandro Maffioli, Mr. Andrea F Presbitero, and Rodolfo Stucchi
International Monetary Fund

statics framework, adapted from the credit union literature, through which MDB lending behavior can be studied. In the model, MDB members fall into two groups: “net contributors” (the industrial countries) and “net borrowers” (the developing countries). The benefits derived by each group are nonhomogeneous. Within each group, member countries try to channel the MDB’s financial resources into those uses that yield the highest expected benefit. The level of benefits member countries can expect to derive depends critically on a number of exogenous market parameters

Mr. Gerd Schwartz

statics framework, adapted from the credit union literature, through which MDB lending behavior can be studied. In the model, MDB members fall into two groups: “net contributors” (the industrialized countries) and “net borrowers” (the developing countries). The benefits derived by each group are nonhomogeneous. Within each group, member countries try to channel the MDB’s financial resources into those uses that yield the highest expected benefit. The level of benefits member countries can expect to derive depends critically on a number of exogenous market parameters

Mr. Gerd Schwartz

banking comes as a surprise. This paper tries to address this apparent gap in the existing literature by offering a simple analytical model through which MDB lending behavior can be studied. The traditional line of research on MDBs, such as the pioneering studies by Dell (1972) , Syz (1974) , Kane (1975), DeWitt (1977) , Hürni (1980), Payer (1982) , Ayres (1983) , Torrie (1983) , and Please (1984) , is largely based on descriptive analysis. More recently, researchers have either analyzed MDBs in a public choice framework, 2/ or concentrated on specific

International Monetary Fund

options, notably the International Finance Facility, global taxes and voluntary contributions, including the analysis of their technical feasibility. We also took note of the international meeting on Action Against Hunger and Poverty convened by President Lula on September 20th 2004 in New York. We ask the Bank and the Fund to continue their work and report at the next meeting on how to take such options forward. We also encourage the Bank to explore the potential for increasing leverage through blending aid with other flows, including MDB lending. 10. Debt