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

By Daniel Gurara, Andrea F Presbitero, Miguel Sarmiento

December 7, 2018

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Daniel Gurara, Andrea F Presbitero, and Miguel Sarmiento. Borrowing Costs and The Role of Multilateral Development Banks: Evidence from Cross-Border Syndicated Bank Lending, (USA: International Monetary Fund, 2018) accessed December 21, 2024

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.

Subject: Bank credit, Economic sectors, Financial institutions, Loans, Money, Multilateral development institutions, Public sector, Syndicated loans

Keywords: Bank credit, Credit reference bureau, Financial inclusion, Global, Loan expansion program, Loan maturity, Loan pricing, Loan term, Loans, MDBs' participation, Microfinance, Multilateral development institutions, Public sector, Syndicated loans, Term loan, WP

Publication Details

Pages:

44
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2018/263
Stock No:

WPIEA2018263
ISBN:

9781484386200
ISSN:

1018-5941

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