IMF Working Papers

Information Asymmetries in Developing Country Financing

By George C. Anayiotos

July 1, 1994

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Format: Chicago

George C. Anayiotos Information Asymmetries in Developing Country Financing, (USA: International Monetary Fund, 1994) accessed November 23, 2024
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 assesses the impact of information asymmetries on developing country financing and considers alternative techniques to reduce the adverse implications of such asymmetries. Following an introduction, Section II examines in general terms the role of information in financial markets and analyzes the incentive and risk sharing properties of alternative financial contracts. Information asymmetries which are present in domestic finance are more prevalent in international finance, in particular in developing country financing. Section III reviews measures aiming to resolve information asymmetries. Borrowing and creditor country regulations and policies, as well as innovative contractual agreements help to resolve a range of issues related to information asymmetries. However, despite their contribution, residual problems remain unresolved. The international financial institutions, and in particular the Fund, have an important role to play in alleviating information asymmetries.

Subject: Balance of payments, Capital flows, Consumption, Financial institutions, Financial sector policy and analysis, Loans, Moral hazard, National accounts, Stocks, Tax incentives

Keywords: Borrower's action, Borrowers' creditworthiness, Capital flows, Capital market, Consumption, Developing country, Expected return, Fund arrangement, Fund program, Global, Incentive problem, Loans, Market re-entry, Moral hazard, Stocks, Utility function, WP

Publication Details

  • Pages:

    28

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1994/079

  • Stock No:

    WPIEA0791994

  • ISBN:

    9781451955781

  • ISSN:

    1018-5941

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