Determinants of Development Financing Flows From Brazil, Russia, India, and China to Low-Income Countries

Author/Editor: Nkunde Mwase
Publication Date: November 01, 2011
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: BRICs development financing flows have increased significantly and are expected to become more prominent in the post-crisis era. We investigate the potential implications on the country-allocation of loan commitments and the degree of concessionality using a panel vector autoregression model and single equation dynamic panel estimation.We find that BRICs lend more to LICs with weaker institutions. Land-locked, resource-scarce LICs receive significantly less financing than other resource-rich LICs. The degree of concessionality is negatively correlated with the amount of loans and positively correlated with better institutional indicators suggesting that the higher the risks, the higher the required returns that BRICs expect.
Series: Working Paper No. 11/255
Subject(s): Concessional aid | Development financing | Economic models | Low-income developing countries

Author's Keyword(s): Aid | BRICs | Low-Income Countries | Panel VAR | Panel OLS | Concessionality
Publication Date: November 01, 2011
ISBN/ISSN: 9781463923914/1018-5941 Format: Paper
Stock No: WPIEA2011255 Pages: 24
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