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The International Monetary Fund (IMF) and the Catalytic Effect: Do IMF Agreements Improve Access of Emerging Economies to International Financial Markets?

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  • Mehmet C. Arabaci
  • Sencer Ecer

Abstract

type="main" xml:id="twec12145-abs-0001"> We investigate whether countries have access to loans with better conditions after an International Monetary Fund (IMF) agreement. We conduct an empirical analysis which takes into account both the maturity and the interest rate of public and publicly guaranteed private debt. A two-stage least squares estimation method is used to avoid selection bias problems. Panel data covering 116 countries between 1984 and 2007 and two other subsets of this panel data are used. The results indicate an improvement in access to international financial markets when an IMF programme is announced. The improvement increases as the sample consists of better-performing countries. We conclude that, the catalytic effect may lower the level of commitment, political will and ‘ownership’ of the programme of the borrower country. On the other hand, borrower countries should consider the catalytic effect in determining the amount of financial assistance from the IMF.

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  • Mehmet C. Arabaci & Sencer Ecer, 2014. "The International Monetary Fund (IMF) and the Catalytic Effect: Do IMF Agreements Improve Access of Emerging Economies to International Financial Markets?," The World Economy, Wiley Blackwell, vol. 37(11), pages 1575-1588, November.
    • Handle: RePEc:bla:worlde:v:37:y:2014:i:11:p:1575-1588
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    File URL: http://hdl.handle.net/10.1111/twec.2014.37.issue-11
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    Citations

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    Cited by:

    1. Julia G. Dobreva, 2019. "Impediments To Economic Development Of Contemporary Economies," Economy & Business Journal, International Scientific Publications, Bulgaria, vol. 13(1), pages 8-15.
    2. Newman, Carol & Page, John & Rand, John & Shimeles, Abebe & Soderbom, Mans & Tarp, Finn (ed.), 2016. "Manufacturing Transformation: Comparative Studies of Industrial Development in Africa and Emerging Asia," OUP Catalogue, Oxford University Press, number 9780198776987.
    3. Krahnke, Tobias, 2020. "Doing more with less: The catalytic function of IMF lending and the role of program size," Discussion Papers 18/2020, Deutsche Bundesbank.
    4. Colin Davis & Ken‐ichi Hashimoto, 2018. "Corporate Tax Policy And Industry Location With Fully Endogenous Productivity Growth," Economic Inquiry, Western Economic Association International, vol. 56(2), pages 1136-1148, April.
    5. Ana Luiza Cortez & Mehmet Arda, 2014. "Global trade rules for supporting development in the post-2015 era," CDP Background Papers 019, United Nations, Department of Economics and Social Affairs.
    6. Kaisa Alavuotunki & Jukka Pirttilä, 2015. "The consequences of the value-added tax on inequality," WIDER Working Paper Series 111, World Institute for Development Economic Research (UNU-WIDER).
    7. Md. Shahidul Islam & Shin-Ichi Nishiyama, 2016. "The Determinants of Bank Profitability: Dynamic Panel Evidence from South Asian Countries," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 6(3), pages 1-6.
    8. Mustafa ÇAKIR & Turgay GEÇER, 2015. "Assessing Recent Turkey’s Foreign Trade Performance," Turkish Economic Review, KSP Journals, vol. 2(4), pages 269-276, December.
    9. Mr. Ali J Al-Sadiq, 2015. "The Impact of IMF-Supported Programs on FDI in Low-income Countries," IMF Working Papers 2015/157, International Monetary Fund.
    10. Paul Mosley & Abdul-Gafaru Abdulai, 2016. "The political economy of 'linked' progressive taxation in Africa and Latin America," WIDER Working Paper Series 131, World Institute for Development Economic Research (UNU-WIDER).

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