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Economic Determinants of Fund Financial Arrangements

Author

Listed:
  • Julio A. Santaella
  • Mr. Malcolm D. Knight

Abstract

This paper analyses empirically the economic factors that lead to approval of Fund financial arrangements. We account for both the economic variables that induce a country to seek an arrangement with the Fund ("demand-side" factors) and the macroeconomic policy commitments that the Fund considers when deciding whether to approve it ("supply-side" factors). Using a pooled sample of annual observations for 91 developing countries over 1973-1991, we obtain maximum likelihood estimates of bivariate and univariate probit equations to determine the probability of approval of a financial arrangement for a given country in a given year. A number of our chosen demand-side and supply-side variables are statistically significant determinants of the approval of a Fund arrangement, and the overall explanatory power of the equations is high.

Suggested Citation

  • Julio A. Santaella & Mr. Malcolm D. Knight, 1994. "Economic Determinants of Fund Financial Arrangements," IMF Working Papers 1994/036, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1994/036
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    Citations

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    Cited by:

    1. Dicks-Mireaux, Louis & Mecagni, Mauro & Schadler, Susan, 2000. "Evaluating the effect of IMF lending to low-income countries," Journal of Development Economics, Elsevier, vol. 61(2), pages 495-526, April.
    2. Bird, Graham, 1996. "Borrowing from the IMF: The policy implications of recent empirical research," World Development, Elsevier, vol. 24(11), pages 1753-1760, November.
    3. Graham Bird, 2004. "External Financing and Balance of Payments Adjustment in Developing Countries: Getting a Better Policy Mix," Palgrave Macmillan Books, in: International Finance and the Developing Economies, chapter 2, pages 14-33, Palgrave Macmillan.
    4. Asli Demirgüç-Kunt & Ms. Enrica Detragiache, 1997. "The Determinants of Banking Crises: Evidence From Developing and Developed Countries," IMF Working Papers 1997/106, International Monetary Fund.

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