Borrowing Costs and The Role of Multilateral Development Banks: Evidence from Cross-Border Syndicated Bank Lending

Author/Editor:

Daniel Gurara ; Andrea Presbitero ; Miguel Sarmiento

Publication Date:

December 7, 2018

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

Cross-border bank lending is a growing source of external finance in developing countries and could play a key role for infrastructure financing. This paper looks at the role of multilateral development banks (MDBs) on the terms of syndicated loan deals, focusing on loan pricing. The results show that MDBs' participation is associated with higher borrowing costs and longer maturities---signaling a greater willingness to finance high risk projects which may not be financed by the private sector---but it is also associated with lower spreads for riskier borrowers. Overall, our findings suggest that MDBs could crowd in private investment in developing countries through risk mitigation.

Series:

Working Paper No. 263

English

Publication Date:

December 7, 2018

ISBN/ISSN:

9781484386200/1018-5941

Stock No:

WPIEA2018263

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

44

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