## A Constrained Choice? Impact of Concessionality Requirements on Borrowing Behavior

_IMF Working Papers, September 24, 2014_

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## Bibliographic details
- Authors: Calixte Ahokpossi, Laurence Allain, Giovanna Bua
- Published: September 24, 2014
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781498349727.001

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### Summary of main findings
- Using a propensity matching score approach, the paper assesses the impact of the IMF’s debt limits policy (DLP) on borrowing behavior in countries eligible to borrow from its concessional lending window.
- Countries under the DLP borrow significantly higher amounts of concessional resources.
- There is no evidence that the DLP significantly impacts the level of non-concessional borrowing nor the terms of such borrowing.
- Heterogeneity analysis indicates that the level of development, rather than concessionality requirements, is the key driver of non-concessional borrowing.

### Methodology
- Empirical approach: propensity matching score approach applied to countries eligible for IMF concessional lending.
- Purpose: isolate the effect of the IMF’s debt limits policy (DLP) on concessional and non-concessional borrowing behavior.

### Heterogeneity analysis and interpretation
- Finding: The heterogeneity analysis confirms the main result that concessionality requirements (DLP) do not significantly alter non-concessional borrowing behavior.
- Interpretation: Differences in the level of development across countries, not the concessionality requirements imposed by the DLP, drive variation in non-concessional borrowing.

### Implications for policy and practice
- Policy implication: Concessionality requirements under the IMF’s DLP appear effective at increasing concessional borrowing without displacing non-concessional borrowing or altering its terms.
- Consideration for policymakers: Efforts to influence non-concessional borrowing should focus on factors related to countries’ level of development rather than on concessionality requirements alone.

### Key bibliographic and metadata elements cited in the paper page
- Authors: Calixte Ahokpossi, Laurence Allain, Giovanna Bua
- Date: September 24, 2014
- Series: Working Paper No. 2014/176
- Issue: 176
- Pages: 41
- DOI: https://doi.org/10.5089/9781498349727.001

*Summary drawn from the IMF working paper landing page for "A Constrained Choice? Impact of Concessionality Requirements on Borrowing Behavior."*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/a-constrained-choice-impact-of-concessionality-requirements-on-borrowing-behavior-42363_