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Is Transparency Good for You, and Can the IMF Help?

Author/Editor: Glennerster, Rachel | Shin, Yongseok
Authorized for Distribution: June 1, 2003
Electronic Access: Free Full Text (PDF file size is 1,672KB)
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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: This paper finds that reforms introduced by the IMF to promote transparency have created more informed markets and reduced borrowing costs for those emerging market countries that volunteered for them. Using a quarterly panel estimation with fixed country effects, we find that sovereign spreads fall following the adoption of three different transparency reforms. The effects are economically important, especially for those countries with low initial transparency. We use two-stage least squares to address any endogeneity in the timing of reforms exploiting internal IMF timetables that are unrelated to country events. Next, using a panel GARCH specification, we show that spreads move more than normal in the days immediately following publication of IMF country documents.
 
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Series: Working Paper No. 03/132
Subject(s): Transparency | Fund role | Article IV consultations | Reports on the Observance of Standards and Codes | Special Data Dissemination Standard | Emerging markets | Capital markets
Author's keyword(s): Transparency | publication | institutions | emerging markets | sovereign spreads | IMF | SDDS | ROSC | Article IV | GARCH
 
English  
    Published:   June 1, 2003        
    ISBN/ISSN:   1934-7073   Format:   Paper
    Stock No:   WPIEA1322003   Pages:   46
    Price:   US$15.00 (Academic Rate: US$15.00 )
       
     
Please address any questions about this title to publications@imf.org.